Car, motorcycle prices expected to drop in Pakistan after upcoming budget

Authorities have started preparations to draft the budget for next fiscal year.

The federal government is considering a proposal to provide relief to Pakistan’s auto sector in the upcoming 2026-27, signaling potential cut in prices of petrol, electric and hybrid vehicles.

The proposals include eliminating additional customs duties and reducing regulatory duties in phases under the National Tariff Policy.

Battery-electric and other new-energy vehicles are also set to be included in the policy. Hybrid vehicle parts may attract a 5 percent customs duty, while the sales tax on hybrid vehicles could be reduced to 9%.

Suggestions for auto parts include a 5% customs duty, 10% on assembled units, and 5-10% on CKD kits.

Exemptions are being considered for electric bikes, rickshaws, and vehicles under certain duty conditions. Locally assembled EVs will receive preferential protection over fully imported vehicles.

The proposals also recommend keeping the national average tariff for locally manufactured cars below 6%, while gradually reducing tariffs on fully imported petrol vehicles.

The government plans to transition auto sector incentives into a regularized regime over time.

Authorities have started preparations to draft the budget for next fiscal year as they sought suggestions from stakeholders.

The federal budget 2026-27 is expected to be unveiled in early June 2026 and it will come into effect from July 2026.