Govt proposes long-term car financing of 7 years, up to Rs10 mn loans

The federal government has started reviewing new proposals under the “Auto Industry Development and Export Policy 2026-31” to make car ownership more affordable for the common people and to revive the struggling auto industry in Pakistan.

The policy is being discussed with the State Bank of Pakistan and stakeholders from the auto sector. It includes proposals to extend car financing tenure up to 7 years, reduce the down payment to 15 percent, and set the financing limit for locally manufactured vehicles up to Rs10 million.

These steps are aimed at improving purchasing power, which has been affected by high interest rates and rising car prices, in order to boost vehicle sales in the market.

The proposed policy also includes strict measures to protect consumer rights. Under these rules, car booking prices will be fixed, and the booking amount will be limited to 20 percent of the total price.

It is also suggested that if a manufacturer delays delivery for more than 30 days, a penalty of KIBOR plus 3 percent will be imposed. In addition, full warranty responsibility will lie with local manufacturers.

The policy further proposes a gradual regulation of used car imports and the phased elimination of import tariff premiums by fiscal year 2030. This is expected to create fair competition and make vehicles more affordable for consumers.

The government has also given special focus to electric and new energy vehicles (NEVs). The plan aims to establish 3,000 charging stations across the country by 2030.

According to the policy, electric vehicles in Islamabad will be fully exempt from registration and token tax. The government also plans to start replacing traditional fuel vehicles with electric vehicles in official departments from December 2027.

The five-year plan aims to achieve annual production of 500,000 vehicles, $1 billion in auto exports, and a significant increase in local parts manufacturing. This is expected to strengthen the auto sector’s contribution to the national economy.