On August 26, 2025, the government announced that, effective next month, accidental and low-quality used cars will be banned from entering Pakistan. Simultaneously, a 40% tariff on used cars will be applied to commercial imports of used vehicles.
Policy Context & IMF Link
This announcement aligns with conditions set by the International Monetary Fund (IMF), under which Pakistan is to open its auto import market. Analysts warn consumers that car prices will not drop immediately, as the high tariff inflates import costs despite relaxed import restrictions.
Phased Reduction Plan
The government intends to reduce the 40% tariff on used cars by 10 percentage points annually, aiming to reach zero within four years. Eventually, the permissible imported vehicle age limit could extend to six to eight years, accompanied by environmental and safety standards to mitigate risks.
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Industry and Consumer Impacts
Local automakers applaud the move as a protective shield, though they note that existing taxes on locally assembled vehicles already range from 30% up to 61%, keeping prices steep for consumers.
Analysts warn consumers that car prices will not drop immediately, as the high tariff inflates import costs despite relaxed import restrictions.
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