Vehicle prices in Pakistan have risen sharply, with increases of up to Rs600,000 reported across various models following the introduction of new taxes in the 2025-26 federal budget. The price hikes, affecting both locally assembled and imported cars, stem from a combination of a new carbon levy on new energy vehicles (NEV) and an increased general sales tax (GST) on certain vehicle categories.
Major automakers, including Toyota Indus Motor Company, have adjusted prices to reflect these changes. For instance, popular models like the Toyota Corolla and Yaris have seen significant markups, with some variants rising by as much as Rs600,000. Posts on X indicate widespread discussion among consumers, with many expressing frustration over the impact on affordability, especially for middle-class buyers. The NEV levy, aimed at promoting environmental goals, has sparked debate about its timing, given the economic pressures already facing the auto sector.
The price surge comes despite a reported 38% increase in car sales in FY25, reaching 112,203 units compared to 81,579 units the previous year, signaling strong demand. However, rising raw material costs and operational challenges, as noted in regional auto industry analyses, are adding further strain on manufacturers and consumers alike. Industry observers expect these adjustments to reshape purchasing trends, potentially boosting the used car market, which is projected to grow 8-10% in the region due to affordability concerns.
Published in SouthAsianDesk, July 13th, 2025
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