ISLAMABAD – Buying a new car in Pakistan could soon become little easier under proposed Auto Policy 2026-31. From budget-friendly Alto to Kia Stonic, several models could see price reductions of up to Rs1.5Lac under proposed Auto Policy 2026–31.
Pakistan’s automobile market could be heading towards major price shake-up, with popular vehicles including Suzuki Alto, Cultus, Every and Kia Stonic potentially becoming cheaper by as much as Rs 143,878 under the government’s proposed Auto Policy 2026–31.
The government is considering ending 2.5% Federal Excise Duty (FED) on eligible locally manufactured and imported passenger cars with engine capacities of up to 1,000cc. If the proposal clears remaining approval stages and manufacturers transfer the entire tax benefit to customers, several popular models could witness noticeable price reductions.
However, the much-anticipated relief is not guaranteed. The policy remains under consideration, and no official revised vehicle prices have been announced.
Suzuki Alto
Alto, the entry level car, could emerge as major beneficiary of the proposed tax reforms. According to estimates based on the removal of a 2.5% tax included in the reference price, the Alto VXR could become Rs 73,045 cheaper, bringing its price down from Rs 2,994,861 to approximately Rs 2,921,816.
Alto VXR AGS could see a reduction of Rs 77,231, potentially lowering its price from Rs 3,166,480 to Rs 3,089,249. Buyers considering the top-end Alto VXL AGS could save an estimated Rs 81,133, with its price potentially dropping from Rs 3,326,446 to Rs 3,245,313.
For customers already struggling to arrange nearly Rs 3 million for an entry-level vehicle, even a reduction of Rs 70,000 to Rs 80,000 could make a difference.
Suzuki Cultus, Every
The proposed tax relief could extend beyond the Alto lineup, potentially reducing the prices of other Suzuki vehicles. Cultus VXL, currently carrying a reference price of Rs 4,359,160, could become approximately Rs 106,321 cheaper. Its estimated price after the assumed tax adjustment would stand at Rs 4,252,839.
Every VXR could witness an estimated reduction of Rs 72,322, bringing its price down from Rs 2,965,200 to Rs 2,892,878. However, the Every’s eligibility remains subject to confirmation of its applicable customs classification, as the reported FED exemption concerns qualifying passenger vehicles under PCT heading 87.03.
Kia Stonic
Kia Stonic could offer potential savings in rupee terms among the vehicles examined. Kia Stonic Turbo X, reportedly powered by a 998cc engine, could see its reference price fall from Rs 5,499,000 to approximately Rs 5,364,878, representing a potential saving of Rs1.30Lac.
The current variant cost Rs5,899,000 could become approximately Rs1.45 Lac cheaper, bringing its estimated price to Rs 5,755,122. However, the Turbo S reference price and exact specifications require independent confirmation from the manufacturer.
figures are illustrative calculations rather than official manufacturer-announced discounts. Actual reductions could differ depending on the final tax treatment, vehicle eligibility and pricing decisions.
Imported Japanese Cars Could Also Become Cheaper
The proposed FED exemption could also bring relief to buyers of imported small-engine vehicles, potentially extending the benefits beyond locally assembled cars.
Selected variants of popular Japanese vehicles, including the Daihatsu Mira, Honda N-One, Toyota Passo and Toyota Raize, could fall within the proposed engine-capacity threshold.
However, eligibility would depend on the exact engine size, customs classification and final government notification.
The proposed exemption would not automatically eliminate other taxes and duties imposed on imported vehicles.
Government Plans Wider Overhaul of Pakistan’s Automobile Industry
The possible FED exemption is only one part of the proposed Automotive and Auto Parts Manufacturing Policy 2026–31, which aims to reshape Pakistan’s vehicle manufacturing and taxation structure.
Under the reported draft, duties on certain imported automobile components could be reduced from 46% to 30% for vehicles in the up-to-1,000cc category during FY2026–27.
The policy also proposes gradual tariff reductions, greater localisation of automobile parts, stronger export incentives and measures to improve the competitiveness of domestic manufacturers.
Separate proposals involving automotive development levies and electric vehicles could also influence prices across other segments of the market.
However, these measures would operate under different tax arrangements, meaning their potential benefits cannot simply be added to the estimated FED reductions.
Why Car Buyers Should Not Celebrate Just Yet
Despite the promising figures, the proposed price reductions face several important hurdles before they can become reality.
Prime Minister Shehbaz Sharif reportedly approved the draft Auto Policy 2026–31 in principle on October 20, but further formal approvals and implementation measures remain necessary.
The policy has been subject to IMF-related review and consideration by the government’s economic decision-making authorities, including the Economic Coordination Committee.
Even after approval, the government would need to issue the relevant legal notification to implement the tax changes.
Manufacturers would then determine how the changes affect their official ex-factory prices.
The calculations presented above assume that the full benefit is passed on to customers and that other price components remain unchanged.
In practice, sales tax treatment, imported component costs, exchange-rate fluctuations and manufacturers’ commercial decisions could affect the final reductions.
When Will New Suzuki and Kia Prices Be Announced?
There is currently no confirmed implementation date for the proposed FED exemption or an official schedule for revised Suzuki and Kia prices under the policy.
Buyers will need to watch for the final policy approval, the government’s tax notification and subsequent price announcements from Pak Suzuki and Lucky Motor Corporation.
Until those developments take place, the estimated prices should not be confused with confirmed showroom rates.
For Pakistanis hoping to purchase a new car, the proposed policy offers the possibility of meaningful savings at a time when even basic vehicles cost several million rupees.
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