Pakistan to unveil new auto policy on July 1, focus on localisation to cut vehicle prices

The Ministry of Industries and Production has reviewed the draft auto policy, expected to be unveiled on July 1, 2026, with a focus on localisation to reduce vehicle prices and strengthen domestic manufacturing.

The review took place at a meeting chaired by Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan, with participation from auto parts manufacturers and relevant officials, including Secretary Saif Anjum and Engineering Development Board (EDB) CEO Hammad Mansoor.

Officials said the policy aims to expand local production of auto parts, with the ministry compiling a list of components that can be manufactured domestically. Protection for locally produced parts is planned for up to five years to support industry growth.

The government is also considering tax and duty adjustments to make vehicles more affordable, particularly for middle-income consumers.

Haroon Akhtar said localisation remains the central objective of the policy, while urging manufacturers to adopt electric vehicle technology to remain competitive. Proposals to introduce incentives for EV parts manufacturing are also under consideration.

The EDB has been directed to engage stakeholders to ensure the policy framework reflects industry input, while officials indicated that small electric vehicles priced below Rs1 million are expected to be introduced this year.

Representatives of the auto parts industry highlighted challenges, including declining performance despite an increase in vehicle assemblers. They raised concerns over import practices, stating that some new entrants import parts at higher duties while continuing to bring components under lower-duty CKD kits.

Industry stakeholders called for prioritising small and medium-sized manufacturers and emphasised the need to promote local production over assembly in the upcoming policy.