Pakistan Delays Auto Policy 2026-31 After Carmaker Opposition

The federal government of Pakistan has postponed the rollout of the Auto Policy 2026-31, which was intended to promote electric and hybrid vehicles. The delay follows strong objections from local automobile manufacturers who said the draft favored EVs and imposed unequal treatment.

The previous Auto Industry Development and Export Policy 2021-26 expired on 30 June 2026, triggering an automatic rise in the general sales tax on hybrid and plug‑in hybrid vehicles from 8.5% to 25% on 1 July 2026. The higher tax has pushed up prices, with manufacturers such as Toyota and Honda raising hybrid vehicle prices by more than Rs1.3 million, and some firms suspending invoicing and deliveries.

Prime Minister Shehbaz Sharif has tasked Deputy Prime Minister Ishaq Dar with preparing a revised draft. Industry groups, including the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), are calling for a balanced tax structure and greater support for local manufacturing, technology transfer, and the development of a charging network before a full transition to electric vehicles.