Budget 2026–27 may bring down car and bike prices

ISLAMABAD: There is a proposal from the federal government to offer relief to Pakistan’s automobile industry during the upcoming 2026-27, indicating an expected reduction in prices for petrol, electric, and hybrid cars.

Proposed exemptions would entail removing the higher customs duties, lowering regulatory duties in phases, and allowing battery-electric and other new-energy vehicles.

Hybrid parts might have a customs duty of 5%, whereas the sales tax on hybrid cars could decrease by 9%. Proposals for auto parts would entail a 5% customs duty, 10% for assembled cars, and 5-10% for CKD kits.

Electric bikes, rickshaws, and other vehicles would benefit from some exemptions if they fall within specific duty criteria. The domestic assembly of EVs would get favorable protection compared to fully imported cars.

Proposed tariffs would entail maintaining the national average tariff on locally manufactured cars at less than 6% and decreasing the tariff on entirely imported petrol automobiles gradually.

The government wants to move the incentives provided to the automobile industry towards regularization in the future.

The government authorities have begun preparing the draft budget for next year as they have asked for suggestions from relevant stakeholders.