The recently announced Federal Budget 2026 has introduced several policy changes that are expected to make a significant impact on Pakistan’s automotive industry. As the government aims to balance economic stability with industrial growth, new tax structures, revised import duties, and incentives for electric vehicles (EVs) have all contributed to a shift in car prices across the board.
Whether you’re a car buyer, dealer, or industry observer, understanding how these budgetary decisions influence pricing is crucial in today’s market.
🚗 What’s New in Budget 2026 for the Auto Sector?
The government has introduced a number of key reforms affecting the automobile sector, including:
1. Reduction in Import Duties
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Customs Duty (CD) and Regulatory Duty (RD) have been further reduced on specific categories of vehicles, particularly used and new imported cars below 1800cc.
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This move is aimed at curbing smuggling, promoting documented imports, and offering more competitive pricing for consumers.
2. Cut in Additional Customs Duty (ACD)
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ACD has been slashed from 6% to 5%, making imported vehicles—especially SUVs and luxury models—more affordable.
3. Incentives for Electric & Hybrid Vehicles
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EVs and hybrid vehicles are now subject to lower import taxes and exemptions from certain levies, making them more attractive to buyers and investors alike.
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Locally assembled EVs also benefit from reduced Sales Tax, enhancing accessibility and supporting the country’s Green Mobility Initiative.
📉 Impact on Car Prices: Winners and Losers
✅ Price Drops:
Due to the duty reductions and favorable tax structures, the following categories are seeing a notable decrease in prices:
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Used Japanese Cars (660cc to 1800cc)
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Hybrid Imports (Toyota Prius, Aqua, Vezel, etc.)
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Luxury SUVs (Land Cruiser, Prado, Lexus LX series)
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Electric Vehicles (EVs) from Chinese and Korean manufacturers
Many used SUVs have seen price drops ranging from Rs. 500,000 to Rs. 8 million, depending on the model, year, and import channel.
❌ Stable or Increased Prices:
In contrast, some locally assembled cars may see little to no relief due to:
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Continued inflation in raw material and shipping costs
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Depreciation of the Pakistani Rupee
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Higher regulatory compliance costs for local manufacturers
Popular models from local brands like Suzuki, Honda, and Toyota may retain current prices or experience slight increases.
⚙️ What This Means for Buyers and the Market
The Budget 2026 measures are likely to stimulate competition in the market. Buyers now have wider choices between locally produced cars and newly affordable imports.
Additionally:
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Dealerships may see increased foot traffic and sales activity
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Importers are encouraged to shift to transparent, tax-paid channels
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EV adoption is set to grow, thanks to lower barriers to entry
📊 Outlook for the Rest of 2026
With global supply chains recovering and policy support from the government, vehicle availability and variety are expected to improve in the coming months. If the exchange rate stabilizes, further reductions in retail prices—particularly in the import segment—are likely.
📝 Final Thoughts
Pakistan’s Budget 2026 has delivered a mixed but overall positive message to the auto sector. Lower duties, especially on used imports and EVs, are helping make vehicles more affordable and the industry more dynamic.
If you're planning to buy a car this year, now might be the right time to explore options in the imported, hybrid, or EV categories.
Stay connected with our blog for the latest car prices, reviews, and policy insights across Pakistan’s auto industry.
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