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Traders claim reconditioned car sales drop by 40%

Muhammad Ayub Ali
16 Aug 2022 00:00:00 | Update: 15 Aug 2022 22:27:47
Traders claim reconditioned car sales drop by 40%
Sourcing of reconditioned cars has also became costlier, which has also left an impact on the situation – Courtesy Photo

Sales of reconditioned cars dropped by at least 40 per cent after the budget for the current fiscal year was passed and the importers reduced imports to a great extent for the fiscal measures.

The Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) attributes fiscal measures and volatility in the exchange rate to the increase in prices of reconditioned cars and the reluctance of importers to import more cars.

Besides, sourcing of reconditioned cars also became costlier which also leaves an impact on the situation, the association said.

The association’s president Habib Ullah Dawn told The Business Post, “Sales of reconditioned cars dropped nearly 40 per cent due to increased price and volatility in the exchange rate.”

Habib Ullah said right now nearly 60 per cent of importers have stopped importing reconditioned cars as a 100 per cent LC margin was made mandatory. “If it lasts long, our business will be ruined,” he added.

According to the traders and showroom owners, they sold a recondition Toyota Axio car of 2017 model at Tk 21 lakh just two months ago and now it rose to Tk 22-23 lakh, Toyota Axio 2018 model was sold Tk 23 lakh which is now Tk 24 lakh and Toyota Premio 2017 model is now sold at Tk 35-36 lakh which was Tk 32-33 lakh two months ago.

The government has imposed a 100 per cent LC margin on the import of reconditioned vehicles to strengthen foreign exchange reserves and encourage local automobile entrepreneurs.

At least five importers told The Business Post that the majority of the banks are not issuing LC which creates an extra burden on the car business.

“In the Japanese market, prices of reconditioned cars increased after Russia began buying cars from Japan after it began the war with Ukraine. Earlier, Russia used to buy cars from European countries,” said Karib Ahmed, director of one of Dhaka’s leading car dealers Karib Auto Ltd. “Our sales have declined nearly 40-50 per cent compared to the previous month,” he added.

Abdul Haq, managing director of Haq’s Bay Automobiles Ltd, said the record increase in prices of dollars and fuel oils left a very negative impact on the reconditioned car business.

Leading dealer Car House Ltd’s manager Momin Hossain Ratan said, “Ongoing situation is difficult for both the card traders and customers.”

BARVIDA Secretary General Mohammed Shahidul Islam said around 500 reconditioned car dealers have invested over Tk 30,000 crore and ensured employment for some 50,000 people.

He called for lowering the LC Margin to 50 per cent for importing cars below 2000cc for the sake of the traders and customers.

Shahidul said prices of cars increased by 15-20 per cent based on model and brand.

Md Alamgir Hossain, a private service holder, said he was planning to buy a car and was arranging funds for the purpose. But now he lost his interest to buy a car after old cars too became costlier and prices of fuel oils increased by 50 per cent.

Like him, a good number of people have lost interest to buy a car.

The usage of cars in Bangladesh is lower than in its neighbouring countries.

In Bangladesh, there are only three cars per 1000 people, which is 897 in Malaysia, and 129 in Myanmar. In Vietnam, car ownership per person is 3 times that of Bangladesh, according to a research paper by the Policy

Research Institute of Bangladesh published in 2021.

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