Pakistan’s car market has been struggling due to record-high prices, making it difficult for many people to afford a vehicle. However, a recent agreement between the Pakistani government and the International Monetary Fund (IMF) could help lower car prices in the coming years. Under this agreement, the government will reduce import tariffs on cars, which could make vehicles more affordable and increase competition in the industry.
Over the next five years, the government plans to cut the effective average tariffs on imported cars by one-third. This will bring the average tariff rate down to 7.1%. The goal of this reduction is to encourage greater competition by allowing more foreign car manufacturers to enter the Pakistani market. Currently, high regulatory duties and a protectionist approach have allowed local car companies to charge high prices with little competition.
Starting in July 2025, the government will introduce major reforms to support the auto industry and consumers. These reforms include eliminating customs duties, cutting regulatory duties by 75%, and implementing a National Tariff Policy that will remain in effect until 2030. By the year 2030, the weighted average tariff for automobiles will drop even further to 5.6%. This will encourage more foreign investment in the country’s auto sector and help lower car prices for consumers.
The government is committed to reducing tariffs in a sustainable way to promote economic growth. By focusing on export-led growth and investing in technology-driven industries, policymakers hope to create a more competitive and affordable car market in Pakistan. These changes could not only benefit consumers but also attract global car manufacturers to set up production in the country, leading to job creation and economic expansion.
