Likely to Lower Car Prices in Pakistan

How Tariff Reduction Will Lower Car Prices 

• Customs Duty (can exceed 100% for some fully built units), 

• Regulatory Duty (ranging from 15% to 90%), 

• Additional Customs Duty, and 

• Various sales and income taxes. 

Expected Impact on Car Prices 

1. Imported Cars (CBUs):
   

• Brands such as MG, KIA, Hyundai, Haval, and Toyota import certain models directly. 

• With duty rates decreasing significantly, the price of these vehicles could drop by 15% to 30% depending on the model and original duty bracket.
  
  

1. Locally Assembled Vehicles (CKDs):
   

• Assemblers rely heavily on imported kits and parts. 

• Lower duties on raw materials and intermediate goods will reduce production costs. 
  

• These savings will likely be passed on to consumers, reducing prices or at least preventing frequent price hikes.
  
  

1. Electric and Hybrid Vehicles:
   

• This segment is expected to benefit even more, as governments worldwide (including Pakistan) already offer incentives. 

• Lower import duties will make EVs and hybrids cars more affordable, accelerating the shift toward sustainable mobility.
  
  

1. Used Car Imports: 
   

• The grey market for used Japanese cars may become more competitive as regulatory costs go down, giving consumers more options at lower prices.
  
  

• Increased Competition: With reduced duties, global automakers might see Pakistan as a more viable market, leading to greater competition and better value for consumers. 
  
  

• Investment in Local Manufacturing: Cheaper access to machinery and components will encourage foreign and domestic investment in assembly plants and parts manufacturing. 
  
  

• Job Creation: Expansion in the auto sector will lead to more employment opportunities, especially for youth with technical education.
   

• Consumer Confidence: If car prices stabilize or decline, consumer confidence and spending in the auto sector may rebound, boosting overall economic activity. 
  
  

• Implementation Pace: The full impact depends on how quickly and effectively the new tariff structure is implemented. 

• Exchange Rates & Inflation: Despite lower duties, currency devaluation or inflation could offset some of the benefits. 

• Policy Continuity: Investors and industry stakeholders will be looking for long-term consistency in government policies to plan their pricing strategies.