Govt Confirms 40% Duty on Used Car Import in Pakistan

Jawad

26 Aug 2025

553

Govt Confirms 40% Duty on Used Car Import in Pakistan

The Pakistani government has announced a major shift in its used car import policy, set to begin next month, which includes a 40% duty on used cars brought in through commercial channels. This measure, part of broader trade and economic reforms, is intended to shield the local auto industry while complying with international financial commitments.

Under the new policy, the import of low-quality or accidental used cars will be strictly prohibited. The imported car duty hike Pakistan aims to discourage mass entry of substandard vehicles while paving the way for cleaner and more controlled vehicle imports. However, consumers hoping for a price drop in the auto market may be disappointed, as used car prices increase Pakistan due to this fresh tariff regime.

High Tariffs to Impact Car Affordability

Government officials, speaking at a joint Senate committee session, clarified that the new Pakistan used car tariff 2025 was part of the agreement with the International Monetary Fund (IMF). The government tax on used cars will impose a 40% price-equivalent duty on all commercial imports of used vehicles. This comes in addition to existing levies, which already constitute 30% to 61% of the retail price of new locally assembled cars.

The committee was informed that used car import tax Pakistan will apply specifically to vehicles imported commercially—up to five years old starting in September. All restrictions on the age and quality of vehicles are set to be lifted by July next year.

Future Roadmap and Tariff Reductions

The new car import tariff 2025 will be gradually scaled back over the next four years, eventually allowing imports of even older vehicles (six to eight years). Environmental regulations and vehicle standards will also be introduced to curb pollution and ensure safety. The average national tariff on imports, currently 20.2%, is to be reduced to 9.7% by the end of the reform period, reflecting a 52% cut.

By FY2026, the government aims to simplify the tax structure to four tariff slabs, with a maximum rate capped at 15%. Additional customs and regulatory duties will also be phased out within four to five years, as part of the country's IMF obligations.

Industry Pushback Against Reforms

Meanwhile, the used car market news Pakistan has sparked concern among local manufacturers. Industry bodies like PAMA and PAAPAM are lobbying against the liberalized import measures, arguing that they could hurt domestic production and jobs. These groups have appealed to lawmakers to reconsider the pace and scope of liberalization in light of the challenges faced by the auto sector.

Currently, the auto industry enjoys significant protection under the existing auto policy, including high tax on used vehicles Pakistan, with duties going as high as 35%. These benefits are scheduled to phase out starting July 1, 2026.

While the new policy opens the doors for commercial imports, the 40% duty on used cars and ongoing restrictions mean there’s little immediate relief for consumers. The government’s efforts to balance IMF reforms with industry protection continue to influence the auto landscape, leaving buyers to navigate rising costs and limited options.

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