Import of reconditioned cars drops significantly
Monday, 23 May 2011
Jasim Uddin Haroon
The import volume of used (reconditioned) cars has declined over the past five months since January last by nearly 43 per cent, a port source told the FE. Imports dropped to 8000 during January -May this year against 14000 plus during the same period in 2010. The month of May is considered as peak time for imports of cars as many importers procure large number of used cars during the month to avoid additional duties to be slapped in the upcoming national budget which is placed in June. During this time the designated areas of the country's two seaports remain jam-packed with cars while this year both the ports have adequate space to accommodate new vehicles, port officials said. There are about 3000 cars at Chittagong port against its 4200 plus capacity and Mongla port has nearly 4000 against 5000 capacity. Two main carriers have carried 2443 cars in May this year against 5302 in 2010. Japan-based NYK Shipping and Everest Bangladesh carry both old and new cars from Japan. Traders said the increase in import duties on new and used foreign cars and fresh Bangladesh Bank (BB) directive for keeping automobile loan below 50 per cent of the cost are the main reasons behind the drop in car imports. Previously most of the banks used to lend around 80 per cent of a car's price to a buyer. Habibullah Dawn, a former president of the Bangladesh Reconditioned Vehicle Importers and Dealers Association (BARVIDA), said that increased duty and the currency factor have pushed up the showroom prices of cars. The appreciation of the Yen has also raised the price of cars by more than 10 per cent, dealers said. "If the dollar remains high, car imports would continue to decline in coming months," he added. Car imports started to decline since the beginning of this fiscal year as the current national budget slapped an additional 35 per cent duty on imported cars, said dealers. The last two fiscal years were boom time for car dealers as banks loans were easily available to the country's emerging middle income groups. Abdul Mannan Khosru, BARVIDA president, said they had appealed to the government through National board of Revenue to reduce the duties on car imports in the budget. "If our proposal is accepted, then the car import will rise," he added.
The import volume of used (reconditioned) cars has declined over the past five months since January last by nearly 43 per cent, a port source told the FE. Imports dropped to 8000 during January -May this year against 14000 plus during the same period in 2010. The month of May is considered as peak time for imports of cars as many importers procure large number of used cars during the month to avoid additional duties to be slapped in the upcoming national budget which is placed in June. During this time the designated areas of the country's two seaports remain jam-packed with cars while this year both the ports have adequate space to accommodate new vehicles, port officials said. There are about 3000 cars at Chittagong port against its 4200 plus capacity and Mongla port has nearly 4000 against 5000 capacity. Two main carriers have carried 2443 cars in May this year against 5302 in 2010. Japan-based NYK Shipping and Everest Bangladesh carry both old and new cars from Japan. Traders said the increase in import duties on new and used foreign cars and fresh Bangladesh Bank (BB) directive for keeping automobile loan below 50 per cent of the cost are the main reasons behind the drop in car imports. Previously most of the banks used to lend around 80 per cent of a car's price to a buyer. Habibullah Dawn, a former president of the Bangladesh Reconditioned Vehicle Importers and Dealers Association (BARVIDA), said that increased duty and the currency factor have pushed up the showroom prices of cars. The appreciation of the Yen has also raised the price of cars by more than 10 per cent, dealers said. "If the dollar remains high, car imports would continue to decline in coming months," he added. Car imports started to decline since the beginning of this fiscal year as the current national budget slapped an additional 35 per cent duty on imported cars, said dealers. The last two fiscal years were boom time for car dealers as banks loans were easily available to the country's emerging middle income groups. Abdul Mannan Khosru, BARVIDA president, said they had appealed to the government through National board of Revenue to reduce the duties on car imports in the budget. "If our proposal is accepted, then the car import will rise," he added.