Pakistan’s automobile sector, long plagued by soaring prices, may finally see relief as the federal government moves to reduce tariffs, making vehicles more affordable in the new fiscal year.

The decision comes as part of a broader trade liberalization plan, reportedly guided by the International Monetary Fund (IMF). Under the new policy, the average import tariff is set to decrease by one-third over the next five years, with auto sector tariffs dropping to just 5.6% by 2030. This shift aims to lower car prices and introduce greater competition in the market.

For years, high import tariffs shielded local manufacturers from external competition, but the new strategy seeks to create a more open market, benefiting consumers with lower prices and more vehicle choices. Additionally, local manufacturers will be encouraged to improve competitiveness at a global level, as the industry adapts to reduced tariff protections.

The tariff reductions are scheduled to take effect in July 2025, with the federal cabinet expected to approve the new national tariff policy by June 2025. Further reforms in the auto industry’s development and export policies are planned for 2026 to ensure long-term growth despite the reduction in protective measures.

As part of the government’s broader economic vision, these reforms align with a push to increase exports and achieve an annual economic growth rate of 4.6%. By 2030, Pakistan aims to develop a thriving and competitive auto industry, attracting international manufacturers and making vehicles more accessible to a larger portion of the population.