The sales of reconditioned cars in the country slumped by over 60 per cent during the Covid-19 pandemic, sector insiders have said.
They said the sector is also suffering from business losses due to tax burden and growing popularity of ride-hailing services
According to the Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA), despite counting huge losses, car importers are deprived of any support from the government's stimulus package unlike many other industries.
They also expressed grave concern over the proposed 'Automobile Industry Development Policy 2020' that aims to phase out use of reconditioned vehicles in five years, which is apprehended to cause huge losses to the reconditioned car traders.
Talking to the Financial Express, BARVIDA secretary general Mohammed Shahidul Islam said around 400 reconditioned car dealers of the country have invested over Tk 200 billion while the sector employed some 50,000 people.
Reconditioned car importers also pay nearly Tk 30 billion a year to the government exchequer as revenues, he said, adding: "Despite such contribution to the economy, the sector got no support from the government to recover from the pandemic losses."
He said, "We demanded remission of port rent fees during the lockdown period as several thousands of cars got stranded in two seaports - Chattogram and Mongla - but the government didn't pay heed to our request."
Above all the reconditioned car traders and dealers are very much concerned about the proposed policy which will encourage car manufacturing industry and 'phase out' buy and sale of used cars in five years.
"We welcome the policy for the sake of the country's economy, but why the authorities want to stop use of reconditioned car before the manufacturing industry comes to maturity," he raised the question.
He also said, "There have been misuse of duty benefits in some other manufacturing industry and we fear that the car manufacturing industry would also become not more than an assembling industry."
Establishment of the car manufacturing industry in the country can be viable if yearly sales of the cars reaches 100,000 units in the domestic market, he said, adding only 20,000 units of cars are sold in the domestic market of Bangladesh in a year.
Import of reconditioned cars have been reducing for last few years due to high tax burden and popularity of ride-hailing services, Mr Islam said, adding that in such situation, phasing out of used cars from the street will impact drastically to car importers.
Besides, the coronavirus pandemic took away 60 per cent of the sector's business, he added.
The BARVIDA secretary general said that depending on the engine capacity, the car importers of Bangladesh pay the highest 826 per cent and lowest 127 per cent tariff and taxes on import of per unit while local manufacturers wouldn't have to pay such high taxes.
According to BARVIDA data, import of used vehicles from Japan in FY 2019-2020 decreased by 46 per cent to 12,502 units from 23,075 units in FY 2018-19.
Import of used cars from Japan in July-November of FY20 decreased to 3,438 units from nearly 5,000 units in the same period of last fiscal year.
Previously on mid-June, BARVIDA claimed that sales of reconditioned cars dropped by over 90 per cent in between March and first week of June, causing losses of Tk 5.0 billion in businesses.
Md Habib Ullah Dawn, former BARVIDA president and owner of Auto Museum Ltd., told the FE that sales of reconditioned cars decreased by nearly 70 per cent in last eight months (February to September) compared to the same time of last year.
Mentioning that over 7,000 cars sit idle in showrooms across the country and in two seaports, he said, "The value of these cars may deplete in the upcoming 2021 because of aging and availability of new models."
Referring to the proposed automobile policy, he said, "High officials of the Ministry of Industries gave us verbal assurance that they will remove the term 'phase out' from the policy to protect reconditioned car trading."
A meeting is scheduled on Wednesday between BARVIDA and Ministry of Industries to discuss on the proposed automobile policy and demands of reconditioned car traders, he said, adding: "We hope for positive outcome at the meeting for the sake of the country's economy."
Car Selection managing director Md Aslam Serniabath said that his company lost at least 50 per cent business due to the pandemic while the reconditioned car industry has already been passing a transition period following lower turnover in previous two years before the pandemic.
He also said the manufacturing industry got loans from the government's stimulus package while trading companies, specially reconditioned car sellers, got zero support from the government.
"Moreover, the government assured us to reduce the port rent charges for at least two months for the vehicles stranded in Chattogram and Mongla seaports, but there is no progress in this regard," he added.
However, he mentioned that some financial institutions have resumed car loan facilities that have been brining some business for last two months.
Meanwhile, Chattogram-based vehicle importer Four Wheelers owner Mohammad Habibur Rahman said a plenty of imported cars remain stranded in ports even before the pandemic.
Importers of other industries enjoyed reduced port rent fees during the pandemic but reconditioned car importers did not get such facility, he said.
He also noted that many companies have decided not to import cars in recent months due to stock of unsold cars and formulation of the automobile policy.
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