Govt announces 40% Tariff on used car imports

ISLAMABAD: The government has announced that accidentally and low-quality used cars will no longer be allowed into Pakistan. At the same time, a 40% tariff will be applied on commercial imports of used vehicles starting next month. Officials say the step is meant to protect the local auto industry.

This move, however, means that car buyers should not expect prices to drop soon. Local assemblers already argue that high government taxes — between 30% and 61% of a car’s retail price — are the main reason vehicles remain costly in Pakistan.

The policy was shared on Monday during a joint meeting of the Senate Standing Committees on Finance and Industry. Joint Secretary for Trade Policy Mohammad Ashfaq told lawmakers that the government, under its IMF agreement, will provide additional tariff protection equal to 40% of the price of new cars.

From September, Pakistan will allow commercial imports of used vehicles up to five years old. All restrictions on age and quality are expected to be removed by July next year, though standards will be introduced to reduce environmental risks. Over the next four years, the 40% tariff will gradually be cut to zero, paving the way for imports of even older vehicles.

Pakistan has also committed to the IMF to halve its overall tariff rates in the next five years, lowering the average from 20.2% to 9.7%. Customs and regulatory duties will be reduced in phases, while exemptions will be removed.

The local auto industry, including PAMA and PAAPAM, has strongly opposed these changes, warning that open imports could damage domestic manufacturers.

For now, analysts say, the government is trying to balance IMF conditions with pressure from the auto lobby. But with the new tariff and ban on accidental cars, consumers are unlikely to see cheaper car prices anytime soon.

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