Auto Policy 2026-31 Approved: What Changes for Car Buyers, Car Loans and EVs

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The Prime Minister has approved the final draft of Pakistan’s Auto Policy 2026-31. It promises a 20% cap on booking advances, bigger loans for electric vehicles and no new tax on small cars. This guide sets out what was announced on 7 November 2026, what it means if you are buying a car, and what has not taken effect yet.

Last checked: 13 November 2026. Most of these measures still need Cabinet approval, official notifications or a State Bank circular before they apply. This page is general information, not financial advice.

What was announced

On Saturday 7 November 2026, the Prime Minister’s Adviser on Industries and Production, Haroon Akhtar Khan, announced the policy at a press conference in Islamabad with Information Minister Attaullah Tarar. Profit reported the next day that Prime Minister Shehbaz Sharif had approved the final draft of the Automotive Industry Policy 2026-31 and sent it to the Cabinet for consideration.

The adviser described six aims: affordable vehicles, exports, local manufacturing, vehicle safety, electric vehicles and transparency. The export target is $6 billion over five years, up from about $200 million now.

What it means for car buyers

Booking advance capped at 20%

Under the policy, carmakers would not be allowed to take more than 20% of a vehicle’s price as an advance payment at booking. Several outlets reported this from the press conference. Until the rule is notified, check the booking terms your dealer gives you in writing.

No new tax on cars up to 1,000cc

The adviser said no additional taxes would be placed on vehicles of 1,000cc or below. The policy proposes an Automotive Development Levy on vehicles above 1,000cc. We have not seen an official rate for that levy.

Prices: gradual, not immediate

The adviser said car prices would come down gradually. No report we read gives a date or an amount, and import duties are to be reduced in steps over the five years. Do not expect a price cut at the showroom this month because of the policy.

Safety standards

The policy adds 45 standards and safety features, intended to bring locally made vehicles closer to international requirements.

What it means for car loans

Electric vehicles

The announced change is for electric vehicles: the financing limit would rise to Rs. 10 million, and reports say the maximum repayment period would go from three years to five.

The reports disagree on the old limit. Dunya News and Daily Qudrat say it rises from Rs. 3 million. Aaj, TechJuice and MM News quote the adviser as saying Rs. 2 million. The new figure, Rs. 10 million, is the same in all of them.

Petrol and diesel cars

We found no report that the limits for ordinary cars are changing. One explainer, The Economy, states that non-electric cars stay on the existing limits. So the State Bank rules described in our SBP policy rate guide still apply.

What happened to the 7-year, 15% down payment plan?

In May 2026, reports on an earlier draft said it proposed a seven-year tenure, a 15% minimum down payment and a Rs. 10 million cap for locally made vehicles. The reports on the November announcement do not mention those terms. Treat them as an earlier proposal, not as part of what was announced.

Can I get the bigger EV loan today?

Probably not yet. Banks follow the State Bank’s regulations, and we have not seen a State Bank circular changing the limits. Ask your bank what it can offer now. To see what an instalment would look like at different amounts and tenures, use our car installment calculator.

What it means for electric vehicles

According to Dunya News, which reported from the policy document in October, the policy proposes:

  • sales tax of 1% on battery electric vehicles, 6% on range-extended electric vehicles and 9% on plug-in hybrids;
  • a reduced-tariff category for lower-priced electric vehicles;
  • lower duties on charging equipment.

The adviser said the goal is for 30% of vehicles to be electric within five years. The Economy reports that the proposed tax rates still need final agreement with the IMF, so they can change.

What is still undecided

  • Legal status. Profit reported that the approved draft went to the Cabinet. One outlet quoted the adviser as saying the policy takes effect immediately. We could not confirm that from an official document.
  • Legislation. Dunya News reported that the policy document targets completing the relevant legislation by December 2026.
  • Loan limits. The State Bank has to change its regulations before banks can lend on the new terms.
  • Levy and tax rates. The rate of the levy on vehicles above 1,000cc and the final EV tax rates have not been officially published, as far as we could find.

If you are buying a car now

  1. Do not plan around a price cut. None has been dated.
  2. Ask the dealer for the booking advance and the delivery date in writing.
  3. If you are financing, ask the bank which limits apply today. Check what you can afford with the vehicle affordability calculator.
  4. If you want an electric vehicle on finance, ask your bank whether it has received new instructions from the State Bank.

FAQs

Has the Auto Policy 2026-31 been approved?

The Prime Minister approved the final draft, and it was announced on 7 November 2026. Reports say it then went to the Cabinet.

Will car prices fall?

The government says prices will come down gradually. No date or amount has been given.

How much advance can a carmaker take at booking?

The policy caps it at 20% of the vehicle’s price. Confirm that the rule has been notified before relying on it.

What is the new car loan limit?

For electric vehicles, the announced limit is Rs. 10 million. For other cars, we found no change to the existing State Bank limit.

Is there a new tax on small cars?

The adviser said there would be no additional tax on vehicles of 1,000cc or below.

Is the 7-year car loan coming back?

It was in a draft reported in May 2026. It is not in the reports on the November announcement.

Sources