KARACHI – July 2025: Car and motorcycle prices in Pakistan have seen sharp increases following the imposition of a new carbon levy and a rise in general sales tax (GST) under the federal budget 2025–26. Starting July 1, several vehicle assemblers began passing the impact on to consumers, while others are temporarily absorbing the cost or postponing price revisions until after Ashura.
Which Vehicles Got Expensive After the Budget?
Suzuki Increases Prices by Up to Rs186,000
Pak Suzuki Motor Company Ltd (PSMCL) raised prices across its entire vehicle lineup. Key price changes include:
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Suzuki Alto
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VXR: Rs2.994 million (+Rs167,861)
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VXL: Rs3.166 million (+Rs177,480)
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AGS: Rs3.326 million (+Rs186,446)
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Suzuki Cultus
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VXR: Rs4.089 million (+Rs40,490)
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VXL: Rs4.359 million (+Rs43,160)
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AGS: Rs4.591 million (+Rs45,460)
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Suzuki Swift
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GL MT: Rs4.460 million
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GL CVT: Rs4.605 million
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GLX CVT: Rs4.766 million
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Suzuki Every
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VX: Rs2.912 million (+Rs163,230)
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VXR: Rs2.965 million (+Rs166,200)
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Suzuki Ravi Pickup
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With Deck: Rs1.975 million
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Without Deck: Rs1.899 million
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PSMCL clarified that these revised prices include Federal Excise Duty (FED), sales tax, and the carbon levy, but exclude advance income tax.
Kia Cars Now Cost Up to Rs700,000 More
Lucky Motor Corporation (LMC) cited the carbon levy, rupee depreciation, and rising freight charges in increasing prices of Kia models by up to Rs700,000:
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Picanto AT: Rs4.090 million (+Rs150,000)
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Stonic EX Plus: Rs5.999 million (+Rs499,000)
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Stonic EX: Rs4.862 million (+Rs95,000)
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Sportage Series
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L Alpha: Rs8.899 million (+Rs400,000)
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L FWD: Rs10.499 million (+Rs600,000)
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L HEV: Rs11.599 million (+Rs600,000)
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Sorento Series
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3.5L V6: Rs13.899 million (+Rs400,000)
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Other variants: Up to Rs17.199 million (+Rs700,000)
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Kia Carnival: Rs18.2 million (+Rs700,000)
Electric Vehicles (EVs) by Kia including V5 Air, EV5 Earth, and EV9 remain unchanged at Rs18.5 million, Rs23.5 million, and Rs43.2 million respectively.
Motorcycle Prices Also See a Jump
Atlas Honda Ltd (AHL) has raised bike prices by Rs2,000 to Rs6,000. Key models:
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Honda CD 70: Rs159,900
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Honda CG-125: Rs238,900
United Auto Industries also revised prices for its popular 70cc variants:
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US-70 Standard: Rs111,000 (previously Rs93,182)
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Self Start: Rs122,000
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Alloy Rim: Rs121,000
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Alloy + Self Start: Rs132,000
NEV Policy 2025-30 and Carbon Levy Details
The federal government’s new NEV (New Energy Vehicle) policy 2025–2030 aims to promote electric vehicle (EV) adoption in Pakistan. In line with this, a carbon levy—also called the NEV adoption levy—has been introduced on Internal Combustion Engine Vehicles (ICEVs) and Hybrid Electric Vehicles (HEVs):
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1% on vehicles under 1300cc
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2% on 1300cc–1800cc
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3% on engines above 1800cc
(Applied on invoice price, including duties and taxes)
While some automakers like MG Pakistan and Haval have opted to absorb the additional cost, most assemblers have passed it on to customers.
Can the Auto Industry Survive Rising Costs?
Despite the positive momentum built since the Auto Development Policy 2016–2021 and the Auto Industry Development & Export Policy (AIDEP) 2021–2026, the industry still faces key structural challenges:
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High production costs
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Low localization of high-value components
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Dependence on imports for engines and electronics
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Weak consumer affordability due to repeated price hikes
Currently, even the smallest 660cc cars are priced above Rs3 million, making car ownership unattainable for most Pakistanis.
Localization, Exports, and R&D: The Way Forward
For sustainable growth, industry experts emphasize:
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Increasing local production to 1 million units/year to attract investment in engine and transmission manufacturing
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Boosting exports of cars and auto parts to reduce per-unit cost
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Investing in R&D to develop cost-effective EV batteries and reduce range anxiety
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Collaborating with academia for innovation in the EV transition process
Motorcycle Industry Still Showing Strong Demand
Despite the levy and price hikes, motorcycle sales are expected to remain strong. According to PBS:
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Two-wheeler parts imports rose 16.5% in July–May FY25
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Bike production increased by 34%, reaching 1.362 million units
Atlas Honda Ltd also reported record monthly sales and production of over 130,000 units in May 2025, with many buyers replacing motorcycles older than five years.
Conclusion: High Prices, Low Affordability – But a Clear Path Forward
The new carbon levy and increased GST are already pushing car and bike prices out of reach for many. While the government’s push for EV adoption is commendable, affordability remains a key challenge.
The auto industry must focus on scale, exports, innovation, and cost reduction to stay viable and meet the goals of the NEV policy 2025-2030. Without significant changes, both ICE and electric vehicles may remain accessible only to a small segment of the population.