In 2025, the Pakistani auto industry is undergoing a transformation with the introduction of new government policies aimed at restructuring the sector. With inflation hitting hard, car prices touching all-time highs, and rising demand for modern vehicles, the Auto Industry Policy 2025 promises to change how Pakistanis buy and experience cars. But will it benefit the common buyer or make things even more complicated? Here’s a detailed breakdown of how these new government rules will affect car buyers in Pakistan.
What is the Auto Industry Policy 2025?
The Auto Industry Policy 2025 is a set of regulations and reforms introduced by the government to:
- Promote local manufacturing
- Encourage new entrants
- Support hybrid and electric vehicles (EVs)
- Control the rising costs of vehicles
- Improve quality and safety standards
The government claims this policy will modernize the auto industry, reduce car prices in the long run, and create jobs through local production.
Key Changes Car Buyers Need to Know
1. Focus on Localization
The new policy puts more pressure on automakers to increase local production of parts and components. This is expected to:
- Reduce dependency on imported car kits
- Lower production costs in the long term
- Create employment opportunities in the auto sector
What it means for buyers: In the short term, prices may stay high, but over the next few years, locally assembled cars could become more affordable.
2. Higher Taxes on CBU (Completely Built Units) Imports
The government has increased regulatory duties on imported cars to protect local manufacturers.
- Import duties on luxury vehicles have been raised
- Small cars (under 1000cc) still get some tax relief
What it means for buyers: Imported cars, especially luxury models, will be more expensive. Middle-class buyers will have fewer options for imported cars.
3. Incentives for Hybrid and Electric Vehicles
To promote green energy, the government is offering:
- Lower import duties on hybrid and electric cars
- Reduced taxes on EV assembly plants
- Support for charging infrastructure development
What it means for buyers: EVs and hybrid cars could become more accessible, and in 2-3 years, we may see cheaper electric options in the market.
4. Strict Safety Regulations
For the first time, safety features like airbags, ABS brakes, and rear-view cameras will be mandatory in all new cars.
- Local assemblers will be required to meet international safety standards
- Roadworthy inspections may be enforced more strictly
What it means for buyers: Cars will become safer, but it may also increase base prices in the short term as manufacturers upgrade features.
5. End to ‘On Money’ Culture
The policy focuses on eliminating the ‘on money’ or premium culture by:
- Imposing heavy fines on dealers charging premiums
- Making early delivery tracking mandatory through online platforms
What it means for buyers: Easier and fairer access to vehicles at original prices, with fewer delays in deliveries.
What Should Buyers Expect?
In 2025, car buyers in Pakistan will experience a mixed phase:
- Short Term: Higher prices and limited imported car options
- Mid Term (Next 2-3 Years): Improvement in quality, more hybrid/EV options, crackdown on on-money
- Long Term (2027 and beyond): Potential decrease in car prices and increase in localized, safer vehicles
Conclusion
The Auto Industry Policy 2025 aims to bring a long-term shift in Pakistan’s car market. While it may be painful in the short term with rising prices and fewer imports, it holds promise for a more stable, localized, and modern auto industry in the future. If you are planning to buy a car, keep a close watch on these policy changes — they could impact your next big purchase decision.
