Govt weighs raising used car import age limit to five years

ISLAMABAD: The government is weighing a major shift in its auto import policy that would allow used vehicles up to five years old to enter the market — a move driven by “pressure” from the International Monetary Fund as part of broader economic reforms.

According to Nukta, the proposal would extend the age limit for imported used cars from the current three years to five, bringing all vehicle categories under a unified threshold. At present, the five-year allowance applies only to SUVs under specific schemes.

If approved, the policy is likely to be included in the upcoming federal budget. The goal is to open up the domestic market, encourage competition, and give consumers more options — all key points in the IMF’s ongoing reform agenda tied to its support programme for Pakistan.

The IMF has also called on Islamabad to unwind regulatory duties and reduce tariffs on fully built imported vehicles (CBUs) to less than 10 per cent. It wants auto-sector duties brought down to single digits within five years, arguing that high protectionist barriers have limited consumer choice and stifled competition.

The international lender is also pushing for lower tariffs on capital goods, a change that could affect a wide range of local industries.

Government officials, however, are cautious. Reducing tariffs and easing import restrictions could lead to a surge in imports — a risk for a country trying to conserve foreign exchange and manage a fragile balance of payments. There are also concerns about the fallout for local carmakers, who are already struggling with weak demand, high interest rates, and declining production volumes.

Industry players are likely to resist any shift that erodes their market share. But some policymakers believe increased competition could pressure domestic manufacturers to raise quality and cut prices, ultimately benefiting consumers.

The auto sector overhaul is one of several reforms the IMF is pressing Pakistan to implement as it negotiates a new financial support package.

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