Prime Minister Shehbaz Sharif approved the final draft of Pakistan’s Automotive Industry Policy on Saturday, setting a framework to lower car prices and boost electric vehicle adoption.
Six priorities of the new auto framework
Adviser to the Prime Minister on Industries and Production Haroon Akhtar Khan and Federal Minister for Information and Broadcasting Attaullah Tarar announced the policy during an Islamabad press conference, as reported by PakWheels.
The framework rests on six priorities: cheaper vehicles for middle- and lower-middle-income buyers, increased automobile exports, greater localisation, improved vehicle safety, electric vehicle promotion, and sector transparency, according to PakWheels.
Did You Know? Pakistan’s assemblers sold 155,631 passenger cars in the 2025-26 period, with total four-wheeler sales reaching about 206,000 when including separately reported jeeps and pick-ups, as noted by Dawn.
Incentives and Financial Projections
The policy proposes a sales tax of just 1% on battery-electric vehicles, alongside exemptions from capital value tax, withholding tax, and federal excise duty for EVs priced up to $50,000.
Car-financing limits will rise from Rs3 million to Rs10 million, while charging-station equipment will receive duty-free status. Import duties will decrease annually over five years to lower manufacturing costs.
Expert Insight: While these fiscal measures signal clear intent to reshape the automotive market, most of them require IMF approval, which may not be forthcoming given their potential impact on the government’s balance sheet.
Economic Pressures and Industry Concerns
The policy faces hurdles because most of these moves require IMF approval, which may not be forthcoming, and they are potentially net negatives for the government’s balance sheet. If new supply chains are opened and local manufacturers are forced to compete with foreign firms, this could endanger up to 1.5 million jobs in the Rs700 billion industry, according to some reports.
Additional safeguards include a mandate requiring manufacturers not to charge more than 20% of the vehicle price as an advance payment at the time of booking, curbing extra charges known as on-money.
What the new auto policy entails
What are the six main pillars of the new auto policy?
According to PakWheels, the framework focuses on cheaper vehicles for middle- and lower-middle-income buyers, increasing automobile exports, greater localisation, improved vehicle safety, electric vehicle promotion, and greater transparency in the auto sector.
Who announced the policy details in Islamabad?
Adviser to the Prime Minister on Industries and Production Haroon Akhtar Khan and Federal Minister for Information and Broadcasting Attaullah Tarar announced the policy during a press conference reported by PakWheels.
What specific limitations affect electric vehicle adoption under the policy?
The policy targets 3,000 charging stations nationwide by 2030, but Senate discussions concluded that Karachi alone requires about 5,000 charging stations to support adequate adoption.
How will the new advance payment caps on vehicle bookings impact consumers across the country?
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