Car prices in Pakistan are expected to decline starting July 2025 as part of a new tariff reduction agreement between the federal government and the International Monetary Fund (IMF). The deal, finalized under the IMF’s guidance, targets a gradual cut in Pakistan’s average tariff rate to 6 percent by 2030, down from the current 10.6 percent.
The changes are designed to increase foreign competition and market access, potentially making Pakistan the lowest-tariff country in South Asia. The reductions will be implemented under the National Tariff Policy and the Auto Industry Development and Export Policy (AIDEP), with the auto sector among the biggest beneficiaries.
For the automobile industry, the government plans to eliminate all additional customs and regulatory duties by 2030. From the first year of implementation, regulatory duties on vehicles will drop between 55 to 90 percent, followed by gradual reductions annually.
Alongside car import costs falling, a new 6 percent customs duty slab will be introduced while duties across existing slabs will be progressively lowered. The maximum import tariff in the auto sector will be capped at 20 percent once the policy is fully rolled out.
The broader tariff reform will also remove several other levies. Additional customs duties will be completely eliminated, regulatory duties slashed by 80 percent, and multiple exemptions under the fifth schedule of the Customs Act withdrawn.
A 7 percent duty on specific imported goods and a 2 percent duty on zero-rated slabs will also be abolished starting July this year. These changes are intended to streamline trade, reduce costs, and align Pakistan’s tariffs with global standards.
Although the IMF initially pushed for a 5 percent average tariff target, the government has committed to a 6 percent ceiling instead. The new tariff roadmap is expected to receive final cabinet approval before the end of June and will be included in the 2025-26 federal budget.
Once fully implemented, the reforms are likely to make imported vehicles more affordable and promote greater consumer choice, while encouraging local manufacturers to remain competitive.
