Prices of local cars and EVs may drop in Budget 2026–27

ISLAMABAD: Prices of locally assembled cars and electric vehicles (EVs) may go down in the coming months. This is because the government is planning to give tax relief on raw materials in the Budget 2026–27.

Sources say the government is thinking about reducing taxes on materials used to make vehicles in Pakistan. This step is aimed at supporting the local auto industry and making vehicles more affordable.

Under the proposal, customs duty on CKD (completely knocked down) kits may be set at 5% for parts that are not made locally and 10% for parts that are produced in Pakistan. The new budget and auto policy are expected to start from July 1 and will include several incentives for the industry.

The government also wants to boost local manufacturing of auto parts, create jobs for skilled workers, and reduce the need for imports.

Focus on Electric Vehicles

The new policy is likely to focus more on electric and new energy vehicles (NEVs). This includes not only electric cars but also hybrid, plug-in hybrid, and fuel cell vehicles.

These vehicles may get lower taxes, and locally assembled EVs could be given more benefits compared to fully imported ones. The government is also considering allowing companies limited concessions to assemble electric bikes, rickshaws, and cars. Each company may get tax relief on up to 100 vehicles until June 30, 2027.

Tariff Changes and Industry Support

The government is also reviewing tariff changes. It may remove Additional Customs Duty and reduce Regulatory Duty. The average tariff on local vehicles may be kept below 6%.

Industry bodies like the Pakistan Association of Automotive Parts and Accessories Manufacturers have suggested more incentives. They recommend a 1% tax on electric vehicles and around 9% on hybrid and plug-in hybrid vehicles.

Ongoing Discussions

Recently, Special Assistant to the Prime Minister Haroon Akhtar Khan held a meeting with key auto industry members. Representatives from Pakistan Association of Automotive Parts and Accessories Manufacturers and Pakistan Automotive Manufacturers Association attended the meeting.

They discussed tax proposals and the upcoming auto policy. Officials said the final decisions will be made after consulting all stakeholders.

The main goal of the government is to support local manufacturers, strengthen the auto sector, and reduce dependence on imports.