KARACHI: Pakistan's fiscal year 2027 budget presents a varied perspective for the automotive sector, amending tax regulations on hybrids and imports while maintaining incentives for electric vehicle (EV) assembly.

According to AKD Securities Limited, the recent budget reveals a mixed approach, aiming to reshape the automotive landscape by increasing taxes on hybrid vehicles and imports, yet continuing to support EV assembly through sustained incentives. These measures are expected to influence market dynamics as the government balances fiscal objectives with industry growth.

In May 2026, auto sales growth maintained its upward trajectory, with total industry volumes increasing by 24% year-over-year. This growth was attributed to stable pricing, the launch of the Green Tractor Scheme, and financing and discount offers by original equipment manufacturers (OEMs). Among the sector's players, INDU emerged as a recommended pick, with a December 2026 target price of PKR 3,966 per share, indicating a potential upside of 94% and an expected dividend yield of 10% for fiscal year 2026.