Govt to Bring 7-Year Installment Plans for Cars With Loans of Up to Rs. 10 Million

The federal government is currently reviewing new and more affordable car financing reforms under the draft Auto Industry Development & Export Policy (AIDEP) 2026–31, top sources informed ProPakistani.

Sources explained that these proposals are aimed at reviving car financing demand and making vehicles more affordable for everyone with a financing cap of up to Rs. 10 million.

Policy proposals under discussion with the State Bank of Pakistan and industry stakeholders include:

• Extending auto financing tenure up to seven years
• Reducing the minimum down payment requirement to 15 percent
• Introducing a Rs. 10 million financing cap for eligible locally manufactured vehicles

Sources said the measures are designed to restore consumer purchasing power after years of high interest rates, strict lending limits, and rising vehicle prices that sharply reduced car sales.

With the new policy, used vehicle imports would move toward regulated liberalization, with mandatory certification, inspection, compliance checks, a tariff premium falling from 40 percent to 0 percent by FY2030, and a 30 percent depreciation cap.

For consumers, the policy proposes fixed booking prices, penalties for delayed delivery beyond 30 days at KIBOR+ 3 percent, a 20 percent cap on advance booking payments, warranty responsibility on OEMs or authorized importers, and a 20 percent maximum markup on spare parts at 3S dealerships.

The proposed framework seeks to improve access to vehicle ownership, stimulate domestic auto production, support localization, and encourage buyers toward locally assembled cars instead of imports.

Sources added that easier financing could significantly boost demand in Pakistan’s struggling automobile sector while supporting economic activity across vendor industries at the same time.

Currently, these are draft proposals only and will be finalized after regulatory review, banking sector consultations, and relevant cabinet committee reviews.

Overall Main Targets Under Draft Policy

Under the draft policy, the main targets by 2031 include annual vehicle production of 500,000 plus units, auto exports of $1 billion, 30 percent NEV share in new vehicle sales, 100,000 tractors a year, and 3,000 EV charging stations.

The policy proposes phasing out Additional Customs Duties by FY2029, reducing Regulatory Duties by 80 percent by FY2030, and ending major SRO-based concessions by FY2030.

Duties on Completely Built Units (CBUs) cars and SUVs would be gradually reduced to improve competition, affordability, and access to newer technologies.

Sources further revealed that CKD duties for cars, SUVs, and minivans would be reduced from 30 percent to 20 percent over five years, while duties for tractors, buses, prime movers, HCVs, and two and three wheelers would mostly be maintained or rationalized.

NEV incentives would continue but become more linked to localization, with EV parts shifted into structured SRO or tariff-based frameworks.

The draft policy plans 3,000 EV charging stations by 2030, including fast chargers, Level 2 chargers, Level 1 chargers, and battery swap stations. It also proposes a fixed commercial charging tariff, viability gap funding, and a requirement for 10 percent of oil marketing company stations in each province to install Level 3 chargers.

NEV demand measures include free registration and token fee exemption in Islamabad, proposed toll exemptions, federal procurement of NEVs, an Islamabad Electric Mobility City, and an ICE to NEV replacement scheme from December 2027.

Domestic Value Addition targets would become performance-linked and digitally verified through PSW. Targets include 80 percent DVA for cars below 1000cc, 55 percent for SUVs, 50 percent for all NEVs, and 85 percent for two and three-wheeler NEVs by FY2031.