KARACHI – Pakistan’s premium vehicle market could be headed for a major price shock as Budget 2026-27 proposals include new carbon levy of up to 19.5% on large-engine petrol and diesel vehicles.
If approved, key models like Toyota Hilux, Fortuner, Kia Sorento and Hyundai Sonata could become up to Rs4 million more expensive, marking one of the biggest tax-driven increases in recent years.
The country’s automobile industry is bracing for a major policy shift as Budget 2026-27 proposals signal tougher taxation on conventional fuel-powered vehicles and fresh incentives for electric vehicles (EVs), potentially reshaping buying trends across the market.
At the heart of the proposals is a new carbon levy ranging from 10% to 19.5% on petrol and diesel vehicles with engine capacities exceeding 2,000cc. The measure is part of the government’s broader strategy to curb emissions, reduce dependence on fossil fuels and accelerate the transition toward cleaner transportation.
Proposed Carbon Levy (20%)
| Brand | Model | Current Price | Exp. Tax Increase | Exp. New Price |
| TOYOTA | Revo G (Manual) | 12,329,000 | 2,404,155 | 14,733,000 |
| Revo G (Automatic) | 12,939,000 | 2,523,105 | 15,462,000 | |
| Revo V (Automatic) | 14,279,000 | 2,784,405 | 17,063,000 | |
| Revo Rocco | 14,869,000 | 2,899,455 | 17,768,000 | |
| Revo GR-S | 15,839,000 | 3,088,605 | 18,928,000 | |
| Fortuner 2.7 G | 12,435,000 | 2,424,825 | 14,860,000 | |
| Fortuner 2.7 V | 14,935,000 | 2,912,325 | 17,847,000 | |
| Fortuner 2.8 Sigma 4 | 18,539,000 | 3,615,105 | 22,154,000 | |
| Fortuner Legender | 18,569,000 | 3,620,955 | 22,190,000 | |
| Fortuner GR-S | 20,499,000 | 3,997,305 | 24,496,000 | |
| HYUNDAI | Sonata 2.0 | 10,330,000 | 2,014,350 | 12,344,000 |
| Sonata 2.5 | 11,545,000 | 2,251,275 | 13,796,000 | |
| Sonata N Line | 16,521,000 | 3,221,595 | 19,743,000 | |
| KIA | Sorento 3.5L V6 FWD | 13,649,000 | 2,661,555 | 16,311,000 |
| ISUZU | D-Max Hi-Rider M/T | 10,990,000 | 2,143,050 | 13,133,000 |
| D-Max V-Cross G M/T | 11,890,000 | 2,318,550 | 14,209,000 | |
| D-Max V-Cross G A/T | 12,490,000 | 2,435,550 | 14,926,000 | |
| D-Max X-Terrain | 13,390,000 | 2,611,050 | 16,001,000 |
If approved, the levy will impact some of the country’s most popular premium vehicles, including all variants of the Toyota Hilux Revo, Toyota Fortuner, ISUZU D-Max, Kia Sorento V6, and Hyundai Sonata 2.5 and N-Line models. Government estimates suggest the tax could generate more than Rs142 crore in additional revenue over the next five years.
Authorities are also considering a phased increase in taxes on imported petrol and diesel vehicles. Rather than imposing a one-time hike, the plan would gradually raise the cost of imported conventional vehicles over the coming years, making them progressively less competitive compared to hybrid and electric alternatives.
EV buyers may not see dramatic price reductions despite the incentives. Under the proposals, the sales tax on completed electric vehicles could rise from 1% to 18%, potentially offsetting some of the relief offered through lower duties on components. The proposed tax regime is expected to have far-reaching implications for consumers already grappling with rising vehicle prices.
Particularly vulnerable is Pakistan’s entry-level car segment, where affordability has become a growing concern. Budget discussions indicate that the Climate Support Levy on petrol-powered vehicles up to 1,300cc could increase from 1% to 3%, adding further pressure on budget-conscious buyers.
Not only big engine cars will get expensive while entry level cars like Suzuki Alto is also expected to be among the most affected models in the segment. According to estimates, Alto VXR could rise from Rs2.99 million to approximately Rs3.05 million. The Alto VXR AGS may increase from Rs3.16 million to around Rs3.23 million, while the Alto VXL AGS could climb from Rs3.33 million to nearly Rs3.39 million if the proposed levy is implemented.
Although the increase appears modest on paper, industry experts say even small price adjustments can significantly affect demand in the budget car market, where buyers often rely on financing facilities, installment plans and long waiting periods to secure vehicle ownership.
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