By ABDULLAH 
The federal government has announced a 40% tariff on used cars in Pakistan, effective from next month. Alongside this, a ban on importing accidental or low-quality vehicles has also been enforced. Officials claim the move aims to protect the struggling local auto industry, but consumers hoping for lower car prices may have to wait longer.
According to Trade Policy Joint Secretary Mohammad Ashfaq, the tariff protection is being introduced under commitments made with the International Monetary Fund (IMF).
- Used cars up to five years old will be allowed for commercial import starting September.
- Import of accidental cars or those not meeting safety standards will be banned.
- A 40% additional tariff will be applied, making imported cars initially more expensive than expected.
- This tariff will gradually be reduced to 0% over four years, paving the way for six- to eight-year-old cars to be imported by 2029.
Despite trade liberalisation, car buyers may not see any immediate price relief. Local assemblers argue that high government taxation (30%–61% of a vehicle’s retail price) already keeps cars out of reach for the average consumer.
For example:
- A small car carries around 30% in taxes.
- A Toyota Altis includes 44% of its price in taxes.
- An LCV pickup carries about 60% in taxes.
- The Toyota Fortuner SUV, priced at over Rs 24 million, includes nearly 61% in taxes alone.
This means even with trade liberalisation, local manufacturers warn that prices will remain high as long as the tax structure remains unchanged.
Under the $7 billion IMF bailout programme, Pakistan is required to cut its average import tariffs from 20.2% to 9.7% over the next five years.
- In FY2026, tariffs will drop to 15.7%, a 22% reduction.
- Customs duties, regulatory duties, and additional duties will all be phased out.
- By 2029, Pakistan will have only four tariff slabs, with a maximum of 15% duty.
The Pakistan Automotive Manufacturers Association (PAMA) and the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) have strongly opposed the move.
- They argue that cheaper imports will hurt local production.
- Executives from Indus Motors and Pak-Suzuki said it is becoming cheaper to import than manufacture locally.
- Lawmakers, however, criticized local assemblers for charging high prices for low-quality cars with fewer safety features compared to imports.
For now, the ban on accidental cars and the 40% tariff means used cars will remain expensive in Pakistan, especially in cities like Lahore, Gujranwala, Karachi, and Islamabad, where demand for imported vehicles is the highest.
However, over the next few years, as tariffs are phased out and restrictions eased, buyers could finally see more affordable options in the used car market.
Q: Are there tariffs on cars in Pakistan?
Yes, Pakistan currently imposes tariffs ranging from 30% to 61% depending on the type of car. The new policy adds a 40% tariff on used car imports starting September 2025.
Q: Can you import used cars to Pakistan?
Yes, commercial import of used cars up to five years old will be allowed from September 2025. Older cars (6–8 years) will be permitted by 2029.
Q: How much tax is imposed on cars in Pakistan?
Taxes range from 30% on small cars to 61% on luxury SUVs. Even locally assembled cars are heavily taxed.
Q: Will tariffs affect used car prices in Pakistan?
Yes. Initially, the 40% tariff will keep prices high. However, as tariffs are reduced to 0% over the next four years, used car prices are expected to drop.
Q: Will this affect used car prices in Canada or other countries?
No. The tariffs apply only to cars imported into Pakistan. However, Pakistani buyers sourcing cars from markets like Japan, UAE, and Canada will face higher import costs.