diff -r 4450faeb52bb -r 2ab79873786e mercurial/localrepo.py
--- a/mercurial/localrepo.py	Fri Apr 15 22:02:07 2022 +0200
+++ b/mercurial/localrepo.py	Tue Apr 05 05:19:47 2022 +0200
@@ -3516,11 +3516,20 @@
 
 
 def instance(ui, path, create, intents=None, createopts=None):
+
+    # prevent cyclic import localrepo -> upgrade -> localrepo
+    from . import upgrade
+
     localpath = urlutil.urllocalpath(path)
     if create:
         createrepository(ui, localpath, createopts=createopts)
 
-    return makelocalrepository(ui, localpath, intents=intents)
+    def repo_maker():
+        return makelocalrepository(ui, localpath, intents=intents)
+
+    repo = repo_maker()
+    repo = upgrade.may_auto_upgrade(repo, repo_maker)
+    return repo
 
 
 def islocal(path):