Pakistan’s new Auto Policy 2026-31 promises cheaper and safer vehicles, but its biggest benefits will go to a small, relatively affluent group of car buyers, leaving millions of motorcyclists and public transport users with limited gains, an independent policy consultant told a LENS virtual workshop on Saturday.
Bilawal Suhag, Head of Research at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), presented an analysis of the policy to journalists, arguing that public policy should ultimately be judged by whether it enables people to reach work, schools and healthcare affordably and safely.
According to his presentation, Pakistan has a population of 241.5 million living in approximately 40 million households, with an average monthly income of Rs82,000. Only 6.6 per cent of households own a car, while around 57 per cent own motorcycles. An estimated 41 per cent of households, representing between 99 million and 125 million people, own no vehicle.
“The people who gain most are the fewest; the largest group gains least,” his presentation concluded.
Tariff cuts and incentives for electric vehicles
The policy was unveiled on November 7 by Information Minister Attaullah Tarar and Haroon Akhtar Khan after the prime minister approved a revised draft in October. It still requires Federal Cabinet approval and formal notification.
Suhag cautioned that the final policy figures could differ from those reported so far.
Pakistan’s Domestic Debt Falls by Rs1.636 Trillion in First Quarter of FY27
Under the proposed framework, tariffs on completely built-up vehicles and completely knocked-down kits will gradually decline to 15 per cent by 2030-31, under a simplified four-tier customs structure of zero, five, 10 and 15 per cent.
Regulatory and additional customs duties are scheduled to be abolished by FY31.
Electric vehicles will receive reduced sales tax rates, ranging from one per cent for battery-electric vehicles to nine per cent for plug-in hybrids. The financing limit for electric vehicles will also increase from Rs3 million to Rs10 million.
Booking restrictions and vehicle safety standards
The policy also seeks to protect consumers by capping advance payments at 20 per cent of a vehicle’s price at booking, a measure aimed at curbing the practice of charging additional unofficial premiums, commonly known as “on-money”.
In addition, 45 new safety standards based on the United Nations WP.29 framework will apply to locally manufactured and imported used vehicles.
Automotive levy to finance export incentives
To finance the policy, the government plans to impose an Automotive Development Levy of two per cent on vehicles with engine capacities between 1,001cc and 2,000cc and 10 per cent on vehicles above 2,000cc.
The levy is expected to generate Rs232 billion over five years, with most of the proceeds directed towards export incentives.
The government’s central objective is to increase automotive exports from $200 million to $6 billion.
Motorcyclists and public transport users remain underserved
Suhag said the policy offered limited relief to the majority of Pakistan’s population.
Duties on locally manufactured components for electric motorcycles and rickshaws will decline from 30 per cent to 15 per cent, but the policy contains no specific relief measures for petrol-powered motorcycles.
Buses and trucks will face a two per cent levy, while no reported incentives have been introduced for electric buses.
He highlighted Karachi’s public transport shortage, noting that the city has 1,029 buses against an estimated requirement of 15,000.
Limited price relief for ordinary buyers
Suhag also questioned whether the policy would significantly reduce vehicle prices for ordinary consumers.
“I do not expect a major drop for ordinary buyers,” he said, adding that any price reductions would depend on market competition and exchange-rate stability.
Concluding his presentation, Suhag argued that Pakistan’s transport policy should prioritise moving more people efficiently rather than increasing the number of cars on the roads.
