Islamabad, September 25, 2025 – The Government of Pakistan has officially allowed the commercial import of vehicles up to five years old, marking a significant shift in automobile trade policy. The decision was approved by the Economic Coordination Committee (ECC) and confirmed through a notification issued by the Ministry of Finance.
Key Features of the Policy
- Eligibility: Cars up to five years old can now be imported.
- Timeframe: Imports will be allowed until June 30, 2026.
- Regulatory Duty: A 40% regulatory duty will be imposed on vehicles that are less than five years old.
- Gradual Reduction: Beginning next year, this duty will be reduced by 10% annually.
- Long-Term Goal: By fiscal year 2029-30, all import duties on such vehicles will be phased out completely.
Government’s Rationale
Officials at the Ministry of Finance explained that the step has been taken to:
- Expand consumer options in a market struggling with high car prices.
- Introduce competition to local assemblers, encouraging better quality and fairer pricing.
- Generate additional customs revenue in the short term, while moving towards a more liberalized trade regime.
- Support consumers with affordable alternatives amid economic challenges.
Impact on the Auto Market
Analysts expect the move to reshape Pakistan’s automobile sector in multiple ways:
- Consumer Relief: Middle-class buyers, who have been priced out of the market due to record-high car prices, may now find relatively affordable imported options.
- Industry Competition: Local assemblers, often accused of charging excessively for outdated models, will face pressure to improve quality and lower costs.
- Used Car Dealers: Anticipated boom in the used car import business, particularly for Japanese brands such as Toyota, Honda, and Suzuki hybrids, which are already popular among Pakistani consumers.
Concerns from Local Manufacturers
Local manufacturers, however, remain wary. Industry insiders warn that a surge in imports could:
- Hurt domestic production and discourage foreign investment in assembly plants.
- Create job losses in the local automobile and parts industry.
- Widen Pakistan’s trade deficit if imports rise significantly without a matching increase in exports.
Long-Term Economic Strategy
The gradual phasing out of duties until 2029-30 signals that Pakistan may be preparing for a more open automotive trade environment. This is consistent with broader economic reforms aimed at attracting global competition and improving consumer welfare.
However, economists note that a careful balance must be struck to avoid damaging local industry while still protecting consumer interests.
Public Reaction
Initial responses on social media and consumer forums have been overwhelmingly positive, with many welcoming the policy as a way to end the monopoly of local car assemblers. For years, buyers have criticized the lack of variety, outdated technology, and high prices of locally assembled vehicles.
Conclusion
The ECC’s decision to allow five-year-old vehicle imports is a landmark shift in Pakistan’s automobile policy. While it promises greater consumer choice and affordability, the government will need to carefully monitor its effects on the local manufacturing sector and trade balance.
If implemented effectively, the policy could mark the beginning of a new, competitive era in Pakistan’s automotive market.
