KARACHI – Pakistan’s upcoming budget will bring cheaper cars as tariffs are likely to be reduced in coming months.
Major development for the struggling automotive market as car prices are expected to come down after announcement of the new budget, after an understanding between Pakistan and the International Monetary Fund (IMF). The agreement, which includes substantial tariff reductions, is set to ease the financial burden on consumers who have been grappling with record-high car prices in recent years.
The key aspect of the agreement is a reduction in import tariffs, which is expected to bring immediate relief to the automobile sector. Under the new National Tariff Policy, the government will lower the average tariff from the current levels to just 7.1%. This is part of a broader plan to cut tariffs by one-third over the next five years, encouraging greater foreign competition and driving down car prices.
Pakistani local automotive industry has been heavily protected by high regulatory duties, making foreign imports expensive and reducing competition. As a result, car prices have skyrocketed, pricing many middle-class buyers out of the market. The new tariff cuts are expected to help break this trend, with local manufacturers now facing increased competition from foreign automakers, ultimately leading to lower prices.
Experts suggest that car prices could see a significant dip over the next few years, with the weighted average tariff for automobiles projected to fall to just 5.6% by 2030. The move is also expected to benefit local car makers, as they will be able to source components at lower costs while also competing with international brands that will now have a more substantial presence in the market.
Pakistani government’s decision to eliminate additional customs duties, cut regulatory duties by 75%, and simplify the customs duty structure is expected to have a profound impact on the auto industry.
IMF also secured assurances from the government that these tariff reductions will remain in place beyond 2027, which will provide long-term stability to the sector. The government’s commitment to maintaining these reduced tariffs for at least three years is part of a broader strategy to encourage export-led growth and foster the development of green and technology-intensive industries.
Check New Car Prices in Pakistan after revised Withholding Tax
