Buyers of petrol and diesel cars in Pakistan might see higher prices under the draft Auto Policy 2026-31, which proposes a new levy on conventional vehicles while aiming to boost electric car use and the auto industry.
Prime Minister Shehbaz Sharif gave his approval to the draft on October 20, 2026, but the policy still needs further clearances before any measures become active.
The proposal sets a 2% Automotive Development Levy for cars with engine sizes from 1,001cc to 2,000cc, and a 10% levy for vehicles above 2,000cc. Cars up to 1,000cc would not be charged. The rates would apply to both imported and locally assembled conventional vehicles.
If manufacturers pass the levy on, the cost of some petrol and diesel cars could rise, though the exact price effect will hinge on the final approved policy and any other adjustments to vehicle taxes or import duties.
The government intends to use the policy to spur electric vehicle uptake, raise domestic production and target $6 billion in auto-sector exports over five years. For consumers, the eventual policy will decide whether conventional cars become costlier or benefit from other tax cuts.
