By MotorsPak Team
Pakistan’s auto industry may be heading toward one of its biggest policy changes in recent years. The upcoming Automobiles and Auto Parts Manufacturing Policy 2026–31, also being discussed as the new Auto Policy 2026–31, is currently at the draft stage. This means the final rules, taxes and implementation details can still change before official approval and notification.
According to recent reports, the new policy is expected to focus on lower tariffs, New Energy Vehicles, used-car import reforms, buyer protection, easier auto financing, localization and exports. The policy is expected to replace the current auto policy after its expiry and may be unveiled around July 1, 2026, subject to government approval and final decisions. (Business Recorder)
Why This Policy Matters for Pakistan
For many years, car buyers in Pakistan have faced high prices, limited options, delayed deliveries, high booking amounts, expensive financing and weak after-sales confidence. At the same time, the local auto industry has also struggled with low volumes, high production costs, import restrictions, exchange-rate pressure and limited exports.
The draft Auto Policy 2026–31 seems to be aimed at changing this structure. Instead of only protecting local assembly, the new direction appears to focus on competition, localization, exports and modern vehicle technology.
However, buyers should keep one thing in mind: this policy does not mean cars will become cheap overnight. Car prices in Pakistan still depend on the rupee-dollar exchange rate, taxes, freight cost, company margins, local production cost and government implementation.
1. Import Duties May Be Reduced Gradually
One of the biggest proposed changes is the gradual reduction of import tariffs. According to Profit Pakistan Today, the draft policy is connected with Pakistan’s wider tariff-reform plan, under which the weighted average tariff on vehicle imports may fall from 10.6% to 7.4% by 2030, while the broader tariff target is around 6% by the end of the decade. (Profit by Pakistan Today)
Reports also suggest that vehicle duties could be simplified under a smaller tariff structure, with customs duties on vehicles potentially capped at 15% over the next five years. (Profit by Pakistan Today)
For buyers, this could mean more competition and possibly better pricing over time. But it would be wrong to say that prices will immediately crash. Even if duties are reduced, final prices will still depend on taxes, exchange rates, shipping costs and how companies price their vehicles.
2. EVs, PHEVs and Hybrids Could Get a Stronger Push
The new Auto Policy is expected to support Pakistan’s shift toward New Energy Vehicles, including EVs, plug-in hybrids and other electrified vehicles. Pakistan already has an official New Energy Vehicles Policy 2025–30, listed by the Ministry of Industries & Production. (Ministry of Industries & Production)
The government has stated that one major target of the NEV Policy is to make 30% of all new vehicles sold in Pakistan electric by 2030. The government also announced an initial subsidy allocation of Rs. 9 billion for FY2025–26, covering electric bikes and rickshaws, with part of the subsidy reserved for women. (PID)
Under the draft Auto Policy 2026–31, reports suggest that NEV-specific parts may receive a proposed 1% customs duty, while hybrid vehicle parts may attract 5% customs duty. Sales tax on hybrid vehicles has also reportedly been proposed at a reduced level. (Profit by Pakistan Today)
If implemented properly, this could encourage more brands to launch EVs, PHEVs and hybrids in Pakistan. But EV adoption will not depend only on taxes. Charging infrastructure, battery warranty, resale value, electricity cost and after-sales support will be equally important.
3. Used Imported Cars May Return Through Regulated Channels
Used imported cars are one of the most sensitive topics in Pakistan’s auto market. Buyers often like used Japanese imports because they offer more features and variety. Local assemblers and parts makers, however, argue that uncontrolled used imports can hurt local production and jobs.
The draft policy reportedly proposes a more regulated system for used-car imports. Instead of informal or uncontrolled imports, commercial imports may be allowed through authorised companies with proper inspection, compliance and after-sales requirements.
Dawn reported that imported vehicles will need to comply with WP-29 safety and emission standards, covering areas such as braking systems, airbags, seatbelts, lighting, emissions, crash protection, tyres and electric-vehicle-specific systems. Local manufacturers are also expected to comply with these standards by June 2026. (Dawn)
This means the new import system may not simply bring cheap used cars into Pakistan. The focus appears to be on regulated imports, where vehicle condition, safety standards, inspections, spare parts and after-sales support matter.
4. Buyer Protection Could Become Stronger
One of the most important proposed changes for car buyers is stronger consumer protection. According to PakWheels’ analysis of the draft, the policy may include measures such as locking the booking price at confirmation, limiting later adjustments mainly to statutory taxes, and requiring compensation if delivery is delayed beyond a certain period. (Pakwheels)
This could be a major improvement for Pakistani buyers, especially those who have faced delayed deliveries, price increases after booking and “own money” culture.
If these rules are properly enforced, buyers may get more transparency and better protection. But enforcement will be the real test. Pakistan has seen many good rules on paper, but weak implementation often reduces their impact.
5. Auto Financing May Become Easier
The draft Auto Policy may also bring changes in car financing. Reports suggest that financing terms could be relaxed, with longer loan tenures, lower down payments and higher financing limits for selected locally manufactured vehicles. (Pakwheels)
This could make monthly installments more manageable for middle-class buyers. However, longer financing periods also mean the buyer may pay more total interest over the full loan period. So, easier financing can help affordability in the short term, but buyers should still calculate the total cost carefully.
6. Local Manufacturing Will Face Both Opportunity and Pressure
The policy is not only about imports and EVs. It also appears to focus on localization, exports and domestic value addition. Reports suggest that the government wants local manufacturers to move beyond simple assembly and increase local production of parts, components and advanced automotive technology. (Profit by Pakistan Today)
This can be positive for Pakistan if it leads to better-quality local manufacturing, more jobs, lower production costs and export potential. However, local parts manufacturers have raised concerns about the draft policy.
Business Recorder reported that PAAPAM urged the government to hold meaningful consultations with industry stakeholders and protect locally manufactured parts through a balanced tariff structure. The association warned that sudden policy changes could affect the local vendor base and industrial jobs. (Business Recorder)
This is where the government needs balance. Too much protection can hurt buyers by keeping prices high. But too much liberalisation without safeguards can damage local industry. A successful policy should increase competition while pushing local manufacturers to improve quality, localization and exports.
7. Vehicle Safety Standards Could Improve
Another important development is the move toward stricter vehicle safety standards. The implementation of WP-29 standards means both imported and locally assembled vehicles may need to meet better safety, emissions and quality requirements. (Dawn)
For Pakistani buyers, this could be a major positive change. In many international markets, features like airbags, stability control, better braking systems and crash protection are standard expectations. If Pakistan enforces safety standards properly, future vehicles could become safer and more reliable.
What Could Buyers See in the Market?
If the draft Auto Policy 2026–31 is approved and implemented properly, buyers in Pakistan could see:
More EVs, PHEVs and hybrids in the market, more competition between local and imported vehicles, stronger buyer protection, better delivery discipline, more regulated used-car options, improved safety standards, easier financing options and more pressure on local brands to improve value.
But buyers should remain realistic. The policy may improve competition and choices, but it will not automatically make every car affordable. Taxes, dollar rate, inflation, freight and company pricing will still play a major role.
Final Thoughts
Pakistan’s draft Auto Policy 2026–31 could become a turning point for the local auto industry. Its direction appears clear: reduce excessive protection, increase competition, promote New Energy Vehicles, regulate used imports, protect consumers and push local manufacturers toward localization and exports.
For car buyers, the biggest benefit may not be an immediate price drop. The bigger benefit could be more choice, better transparency and stronger pressure on automakers to compete.
For the local industry, the policy could be both an opportunity and a challenge. Companies that invest in quality, localization, after-sales support and new technology may benefit. Those relying only on limited competition and high protection may face pressure.
At this stage, the most important point is that the policy is still a draft. Final details will only become clear after official approval, budget decisions and government notifications. But one thing is certain: Pakistan’s auto market is entering a very important phase.
Sources & References
This MotorsPak blog is based on publicly available information from the Ministry of Industries & Production, Press Information Department, Profit Pakistan Today, Dawn, Business Recorder and PakWheels. Since the Auto Policy 2026–31 is still in draft stage, final details may change after official approval and notification.
