As the federal government of Pakistan has announced the budget for 2025-26 to be presented on June 10, it is expected to provide relief on the import of used vehicles, and a significant price reduction for small cars is also anticipated.
All Pakistan Motor Dealers Association Chairman HM Shahzad has expressed his expectation that the upcoming federal budget will see a significant reduction in duties on used vehicle imports and a decision to extend the three-year age limit to five years is expected, after which the price of small vehicles is likely to decrease by Rs 5 to 1 million and a small vehicle will be available for less than Rs 2 million.
Talking to a private TV, HM Shahzad said that Pakistan has assured the IMF that the heavy duties and taxes imposed on used vehicles will be gradually reduced over the next five years, and a competitive tax will be imposed in the form of either sales tax or customs duty.
According to Shahzad, currently the total duties imposed on vehicles range from 96 per cent to 475 per cent, which will be gradually reduced by 20 per cent every year over the next five years.
The Chairman of the Motor Dealers Association says that if the government allows the import of five-year-old vehicles and imports on a commercial basis, there will be a big difference in the prices of vehicles. In Japan, a five-year-old vehicle is available at almost half the price of a three-year-old vehicle. At present, if a three-year-old vehicle costs eight thousand dollars, a five-year-old vehicle can be found for three and a half or four thousand dollars. Thus, there is a possibility of a reduction in prices of five to one million rupees.
HM Shahzad says that if the proposed measures are implemented, the price of small vehicles can be reduced by five to one million rupees. According to him, the price of the smallest car assembled in Pakistan is currently Rs 3.1 million, while the same vehicle is available in the neighbouring country for just Rs 4.5 million. If the difference in currency value is also removed, the Pakistani price will be Rs 1.3 million. If duties and age limits are relaxed, the Pakistani people will be able to get a better quality Japanese vehicle for less than Rs 2 million.
According to HM Shahzad, if the government fully complies with the IMF’s conditions, the import of used vehicles in the next financial year could reach 70,000 to 80,000 units, which is currently around 30,000. This will also significantly increase the government’s revenue.
He says that the increase in vehicle imports will increase the government’s revenue by 70 per cent. The proposed measures will not only make vehicles cheaper, but will also end the monopoly of local assemblers, after which they will have to improve quality and move towards full manufacturing. Localisation has not been achieved in the country. We still depend on CKD kits. If competition comes, local assemblers will have to improve themselves. In this way, the elimination of duty on the import of imported vehicles and the increase in the age limit will increase competition in the local market, which will enable the local industry to strengthen itself.
He expressed hope that if the IMF’s proposals are included in the budget, it could prove to be a big and positive step for Pakistan’s auto industry, the public and the government. The public will get quality vehicles at affordable prices, the government will get revenue, and the assemblers will have to adapt themselves to international standards.
