Petrol cars in Pakistan could become cheaper by up to Rs1 million under the government's new auto policy, with detailed price figures for different vehicle categories emerging on Sunday, 9 November. The numbers, reported by Pakistani media citing official documents, give buyers their first clear picture of how much the policy announced two days earlier might actually save them.
According to the details, the price of a locally assembled petrol car with an engine of up to 658cc is expected to fall by Rs375,000, from Rs3.22 million to Rs2.845 million. A car of up to 998cc would become cheaper by Rs440,000, dropping from Rs4.27 million to Rs3.83 million. The savings grow with engine size: a petrol SUV of up to 1,496cc could fall by Rs740,000, from Rs6.06 million to Rs5.32 million, while a petrol jeep of up to 1,598cc could come down by Rs1 million, from Rs12.1 million to Rs11.1 million.
The figures follow the formal unveiling of the five-year Automotive and Auto Parts Manufacturing Policy 2026-31 on Saturday, 7 November, when Prime Minister's Adviser on Industries Haroon Akhtar Khan and Information Minister Attaullah Tarar addressed a press conference in Islamabad. The policy was approved on the special instructions of Prime Minister Shehbaz Sharif after lengthy consultations with the industry, and it took effect the same day.
At the heart of the expected price cuts are reductions in federal excise duty and customs duty. The government plans to lower duties on completely knocked-down kits, components, sub-components and raw materials, which should bring down the manufacturing cost of locally assembled vehicles. The adviser told reporters that the prices of all vehicles except luxury models would come down, and that the reductions would be phased in gradually over the five-year life of the policy as tariffs are brought closer to internationally competitive levels.
The policy is built around six pillars: cheaper vehicles, especially for the middle and lower-middle classes; encouraging exports; localisation; vehicle safety; promotion of electric vehicles; and transparency. One of its headline targets is to raise cumulative automotive exports from about $200 million today to $6 billion over five years, with manufacturers that meet export targets receiving a 5 per cent drawback of local taxes and levies and a further 10 per cent incentive on incremental exports.
Small cars are the clearest winners in the framework. The government has said no additional tax will be imposed on vehicles with engines below 1,000cc, and the adviser singled out the 850cc, 1,000cc and 1,300cc categories for special attention. Electric vehicles priced below $50,000 will be exempt from capital value tax, withholding tax and federal excise duty, while the financing limit for electric vehicles has been raised from Rs2 million to Rs10 million.
There are, however, important caveats that buyers should keep in mind. The published figures are estimates based on policy documents, not confirmed showroom prices. No car manufacturer has yet announced revised prices, and one report noted an inconsistency in the documents themselves, which in one place mention a reduction of only Rs10 for the 1,598cc jeep even as the listed prices show a fall of Rs1 million. The final impact will depend on the official notification of revised tax rates, and some of the proposed tax measures still require approval from the International Monetary Fund.
Not every vehicle will become cheaper. The policy finances its electric-vehicle incentives through an automotive development levy on internal-combustion vehicles above 1,000cc, with cars between 1,000cc and 2,000cc facing a 2 per cent levy and those above 2,000cc facing 10 per cent. Industry estimates suggest a large SUV such as the Toyota Fortuner could actually become more expensive by about Rs1.2 million, rising from roughly Rs20.5 million to Rs21.7 million.
The policy also brings new protections for buyers and new obligations for manufacturers. Carmakers will no longer be allowed to collect advance payments of more than 20 per cent of a vehicle's price at booking, and 45 additional safety standards and features are being introduced to bring locally manufactured cars closer to international norms. Manufacturers that fail to meet their export and localisation targets will face penalties, under a reward-and-penalty mechanism the government says is designed to force the industry to compete.
For now, the wait is for the paperwork. The government's detailed tax notifications and tariff schedules will determine which vehicles qualify for concessions and when the savings actually reach showrooms, and the reductions are intended to arrive gradually over five years rather than all at once. Buyers watching the market will be looking first for the official notifications, then for revised price lists from the assemblers, before the promised relief becomes real money saved.
