Pakistan auto policy 2026–31 may cut hybrid vehicles prices

The draft policy has been submitted to Prime Minister Shehbaz Sharif for consideration. If approved, it will remain in effect from 2026 to 2031.

The proposal covers hybrid cars, trucks, light commercial vehicles and buses. The planned changes would be introduced gradually during the five-year policy period.

Hybrid vehicle duties may fall

Under the draft, customs duty on hybrid vehicles above 1,801cc could fall from 50% to 30%. The same reduction is proposed for vehicles in the 1,501cc–1,800cc category.

For vehicles between 851cc and 1,000cc, the duty could also decline from 50% to 30%. Hybrid vehicles up to 800cc are proposed to receive the same reduction.

The draft also suggests reducing duty on hybrid trucks from 30% to 15%. For hybrid light commercial vehicles, the duty could drop from 60% to 30%, while hybrid buses could see a reduction from 30% to 15%.

The policy further proposes a 20% reduction in import taxes on hybrid vehicles above 1,800cc during the five-year period. If approved, these measures could make imported hybrid vehicles more affordable.

Proposed relief follows tax increase

The proposed cuts come after hybrid vehicles faced higher taxes in the FY2026–27 budget. The earlier concessional sales tax treatment ended with the Auto Industry Development and Export Policy 2021–26 on June 30.

After the concession ended, qualifying hybrid vehicles became subject to the standard 25% general sales tax. The higher tax pushed up prices of several popular hybrid models.

Toyota and Honda increased the prices of some locally assembled hybrid vehicles by more than Rs1.3 million. The price increases added to concerns about the cost of hybrid vehicles in the local market.

Government works on new auto policy

The government has been preparing the new auto policy for several months. An Ishaq Dar-led steering committee reached an in-principle agreement on the policy in August before it moved into the approval process.

If the draft receives final approval, lower duties could make hybrid vehicles more competitive in Pakistan. The policy could also encourage the use of fuel-efficient vehicles and bring changes to the country’s vehicle import and taxation system.

The proposed duty cuts could provide relief to buyers who are considering hybrid vehicles. Lower import costs may also increase competition and give consumers more choices.

However, the changes are still proposals and depend on final government approval. The impact on vehicle prices will also depend on how quickly the new duty structure is implemented.

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