Business Desk 
Aug 26, 2025
The government of Pakistan has announced a 40% tariff on used car imports starting next month, a move which is believed to protect local manufacturers.
While the newly imposed 40% tariff on used cars has received a warm welcome from domestic car-makers, it is likely to delay benefits for consumers.
During a joint session of the Senate's finance and industry committees, Mohammad Ashfaq, joint secretary of trade policy, confirmed that low-quality and accident-damaged vehicles will be banned under the new rules.
As part of the IMF programme, Pakistan is bound to allow the import of commercial used cars up to five years old from September, with plans to lift all age restrictions by July next year.
As of now, car imports in Pakistan only involve cars brought in through transfer of residence, baggage, and gift schemes, account for nearly 25% of local demand as many buyers prefer imported cars over local models.
Ashfaq explained that used car imports will face a 40% tariff compared to new vehicles during the initial phase of liberalisation.
This tariff will gradually decrease to zero over four years, allowing imports of vehicles up to eight years old. Measures will also be taken for older cars to address environmental concerns.
Pakistan is required to reduce overall import tariffs from 20.2% to 9.7% over five years. In FY26, rates will drop to 15.7% by cutting customs and regulatory duties.
Nevertheless, local manufacturers argued that trade relaxation will not result in lower prices, as government taxes already make up a significant portion of car costs.
