Pakistan’s automotive sector is reeling from significant price hikes following the implementation of the Climate Support Levy (CSL) under the new auto policy. For the first time, all locally assembled hybrid, petrol, and diesel vehicles are subject to this tax, aimed at reducing carbon emissions. The levy has led to substantial price increases across major brands, impacting consumers nationwide.

The Climate Support Levy (CSL) is tiered based on engine size:

• 1% for vehicles up to 1300cc.
• 2% for vehicles between 1301cc and 1800cc.
• 3% for vehicles above 1800cc.

Price Hikes by Manufacturer

Auto reports outline the expected price increases in respect to the manufacturers.

Toyota:

• 1300cc models: Rs. 89,000–112,000 increase.
• 1500cc: Rs. 125,000 hike
• 1600cc: Rs. 131,000.
• Above 1800cc: Rs. 300,000–500,000 increase.

Suzuki:

• VXR models: Rs. 28,000–45,000 hike.
• CVT models: over Rs. 40,000 increase.

Honda:

• 1200cc: Rs. 46,000 increase.
• 1500cc: Minimum Rs. 108,000 hike.

Kia:

• Rs. 39,000–500,000 increase across models.

Hyundai:

• Rs. 194,000–476,000 hike.

The CSL, combined with a Rs. 2.5 per liter carbon tax on fuel aims to promote eco-friendly vehicles like EVs. However, with limited EV options and charging infrastructure, the levy adds financial strain for consumers already facing inflation. Entry-level cars like the Suzuki Alto could see prices rise by up to Rs. 186,446, worsened by an increased GST from 12.5% to 18% for vehicles up to 850cc.

Despite a recent 73% surge in vehicle sales in January 2025, the price hikes may dampen demand, especially for budget-conscious buyers. Industry experts warn of a potential slowdown, given the 47% sales decline in the prior financial year.