The government says vehicles with engines of 1,000cc or less will face no additional taxes, while financing limits for electric vehicles will be increased to Rs.10 million.
Pakistan’s government has announced key features of its new Auto Policy 2026, promising tax relief for buyers of small cars, incentives for electric vehicles and stricter safety standards for locally manufactured and imported vehicles.
Haroon Akhtar Khan, the prime minister’s adviser on industries and production, said vehicles with engine capacities of 1,000cc or less would not face any additional taxes.
He said the decision had been taken on the prime minister’s special instructions, adding that small-engine vehicles were primarily intended for middle- and lower-middle-income households.
The policy aims to provide relief to consumers, strengthen the domestic automobile industry, increase exports, and bring vehicle quality in Pakistan closer to international standards.
The government is also planning to make electric vehicles (EVs) more affordable by increasing the financing limit from Rs.3 million to Rs.10 million.
The repayment period for EV financing will also be extended from three to five years, Haroon Akhtar Khan said.
The measures are intended to make electric vehicles more accessible to consumers and encourage their adoption in Pakistan.
Under the new policy, Pakistan will introduce 45 additional vehicle safety standards under the United Nations WP.29 framework.
The government says the move is aimed at bringing locally manufactured and imported vehicles in line with international safety requirements.
The policy also includes measures to improve transparency in the automobile sector and protect buyers from unfair practices.
Third-party audits will be conducted every six months to ensure transparency, while car manufacturers will be prohibited from collecting booking payments exceeding 20 percent of a vehicle’s price.
