How Import Duties and a Possible Car Import Ban Could Impact Prices

The Pakistan auto market continues to face uncertainty as policymakers introduce new measures affecting both locally assembled vehicles and imported models. In late 2025, the government imposed a 40% regulatory duty on commercial used-car imports under S.R.O. 1898(I)/2025 — a move aimed at controlling the rapid rise of imported used vehicles in the country.

However, despite these new duties, industry associations argue that used car imports still create “disruptive” pressure on local assemblers. This has reignited debate around an even stricter policy: a potential car import ban in Pakistan.

Given this shifting landscape, consumers are asking one critical question:
How would a car import ban affect car prices in Pakistan?

How Imported Cars Shape the Pakistan Auto Market

Pakistan’s car market is a blend of:

  • Locally assembled vehicles

  • Imported CBU vehicles

  • Used imported cars, which continue to grow in popularity

Imported small cars, hybrid models, and budget-friendly Japanese used vehicles fill major affordability gaps. For many families, they represent the only viable alternative to increasingly expensive locally assembled cars.

Because of this, any restriction — let alone a total ban — has the potential to reshape car prices in Pakistan dramatically.

Supply Shock: What a Car Import Ban Would Mean

If Pakistan were to introduce a ban on imported cars, the consequences would be immediate:

1. Significant Drop in Car Supply

Imported vehicles make up a large share of available options, especially in the affordable and eco-friendly categories.

2. Reduced Competition

With fewer brands and models in the market, local assemblers would face less pressure to keep prices competitive.

3. Higher Prices for New and Used Cars

Lower supply and limited choice would naturally push up prices across all segments.

Additionally, because Pakistan’s local automakers rely heavily on imported CKD/SKD kits, restrictions could eventually spill into assembly lines — further tightening supply.

This combination creates the perfect storm for a major car price increase in Pakistan.

Cost Push Factors: Import Dependence, Rupee Pressure & Scarcity

Even without a ban, Pakistan’s auto sector is vulnerable to several cost drivers:

1. Heavy Dependence on Imported Auto Parts

Most “locally assembled” cars still use foreign-sourced components. Import restrictions reduce economies of scale and raise production costs.

2. High Exchange-Rate Pass-Through

When the Pakistani rupee depreciates, car prices rise quickly. Auto manufacturers have historically passed on exchange-rate fluctuations directly to consumers.

3. Scarcity of Used Cars

If used imported car inflows decline, demand shifts to existing vehicles. Buyers compete for limited “good-condition” used cars, causing another jump in prices.

Together, these factors ensure that any import ban — or even stricter import controls — would intensify car price inflation.

What Needs to Change to Avoid a Car Price Spike in Pakistan

For a car import ban not to trigger widespread price hikes, Pakistan would need substantial structural reforms, including:

✔ Expansion of Local Parts Manufacturing

Reducing reliance on imported components is essential to stabilize costs.

✔ Tax Incentives for Local Assemblers

Lower production costs could help keep vehicle prices in check.

✔ Encouraging Market Competition

Allowing new automakers and vendors to enter the market can prevent monopolistic pricing.

✔ Strong Quality & Safety Regulations

This avoids the risk of black-market or low-quality vehicles replacing imported options.

Without these reforms, an import ban would almost certainly worsen affordability for the average car buyer.

Conclusion: Will Car Prices in Pakistan Increase with an Import Ban?

Pakistan still permits used and CBU imports, but the policy landscape is shifting rapidly. Considering:

  • heavy dependence on imported components,

  • high exchange-rate volatility, and

  • limited local production capacity,

a car import ban in Pakistan would likely lead to higher prices for both new and used vehicles.

To keep prices stable, the government would need to pair any ban with strong industrial, fiscal, and regulatory reforms. Until such changes occur, consumers should remain cautious about policy proposals and prepare for the possibility of rising car prices if import restrictions tighten further.