The federal government is considering a plan to gradually eliminate duties on used car imports, under a new auto policy expected to take effect from July 1, 2026.
According to sources, a draft of the policy is currently being prepared and is in the early stages of consultation with the International Monetary Fund.
The proposed framework suggests a phased reduction in additional customs and regulatory duties on imported vehicles over the next four to five years, with overall customs duty rates likely to drop significantly by 2030.
As part of the plan, the import of vehicles older than five years may eventually be allowed, subject to strict safety and environmental standards along with mandatory certification requirements.
Officials aim to finalise the draft within the current month, followed by further discussions with the IMF. The policy is expected to be presented to the federal cabinet for approval next month.
The move is part of broader efforts by the Ministry of Industries and Production to rationalise tariffs and make the import regime more transparent and competitive.
From fiscal year 2027, additional duties are likely to be reduced by 10 per cent annually, while the import of vehicles up to seven years old may also be permitted in later phases.
Alongside these changes, the government is planning to introduce stricter safety regulations for locally manufactured vehicles through the proposed Motor Vehicle Development Act, which will be tabled in parliament.
How many cars sold in Pakistan in one month?
Pakistan recorded the sale of 11,755 passenger cars in March 2026, with a 45% increase year-on-year, according to data released by the Pakistan Automotive Manufacturers Association.
Despite the annual growth, sales declined 12% compared to February 2026, when 13,388 units were sold.
Analysts say the sharp rise in car sales was driven by improved economic conditions, including lower interest rates, easing inflation, and growing consumer confidence. The entry of new players into the market has also contributed to increased demand.
For the first nine months of FY2026 (July 2025 to March 2026), total car sales reached 109,655 units, up significantly from 75,397 units during the same period last year.
Auto expert Mashood Ali Khan said that Pakistan’s automotive sector is witnessing a steady recovery, with the market regaining stability after a difficult period. He stated that small cars continue to dominate, while the SUV segment is expanding rapidly due to competition among Chinese, Korean, and Japanese brands offering better pricing and financing options.
