The government is considering major changes to duties and taxes under the upcoming auto policy aimed at making vehicles more affordable for Pakistan’s middle class, signaling a potential shift in the country’s automotive landscape.

Prime Minister Shehbaz Sharif has reportedly directed authorities to focus on reducing vehicle prices and expanding access to cost-effective transport options for middle-income households.

Speaking at a media briefing, Hammad Ali Mansoor of the Engineering Development Board said proposals to revise the auto sector’s tax and duty structure are under review as part of a new policy expected to be announced on July 1.

He said three small fully built electric vehicles are expected to arrive in Karachi in the third quarter of this year, with initial prices projected to be under Rs1 million. The plan also includes developing large assembly facilities in Karachi and Lahore as part of a broader push to strengthen local production.

Officials noted that rising fuel prices have accelerated demand for electric vehicles, with EV sales reportedly tripling in March. The sector is also expected to benefit from upcoming lithium battery manufacturing projects that could reduce costs and improve supply chains.

However, industry experts have raised concerns over weak local auto parts manufacturing despite an increase in assemblers, warning that reliance on imported CKD kits continues to limit domestic value addition.

In the broader market, auto sales showed mixed performance, with monthly declines in some manufacturers but strong year-on-year growth across the sector. Overall vehicle sales fell 9% month-on-month in March but rose 40% year-on-year, while total sales for July–March FY26 increased 43% to 144,029 units.