Price hike lowers demand for re-conditioned cars
Saturday, 30 April 2011
Monira Munni
The demand for re-conditioned cars has dropped substantially due to high import duty, depreciation of local currency against the US dollar, and impact of Japan's recent natural disaster, traders said. They have claimed that the sale of reconditioned car has dropped by nearly 60 to 70 per cent because of these factors. However, customers blamed the traders for hiking the price of each car by Tk 3,00,000 to Tk 4,00,000 under different pretexts. Abdul Mannan Chowdhury, president of Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) said depreciation of taka against the US dollar, depreciation of the US dollar against yen, Japan's recent situation, and the government's tax measures are responsible for the price hike of reconditioned cars. Habibullah Dawn, former president of BARVIDA, blamed the absence of a long-term and stable tax policy on car import for the ongoing declining trend in sale. "The market experiences this kind of unstable situation every year, as the government revises tax on car import in every budget." He said price hike of all kinds of car is natural because of duty hike. The government, on an average, raised duty on cars by Tk 600,000 during the last two financial years. Moreover, depreciation of taka against dollar has also forced the importers to pay more duty, he added. "The Toyota Corolla car we used to sell at Tk 9,50,000 in 2009, is now being sold at Tk 19,50,000," he said. Replying a question regarding price hike of cars before the budget, he said it is natural to witness a price hike, if hints come from the government that it might impose higher duty on cars on the ground of reducing traffic congestion in the capital. "The duty hike has seriously affected the sale of reconditioned cars," he added. There were 100 to 150 Bangladeshi exporters in Japan, who supplied reconditioned cars to the local traders. The number has now declined to only 50, as most of them have switched to other businesses due to decline in local demand and price hike of cars, Mr Dawn claimed. "Sale at the city's car showrooms has dropped to half due to the government's high tax measures, appreciation of dollar, and Japan's recent disaster, resulting price hike of all kinds of car," Mahbubul Haque Chowdhury, former general secretary of BARVIDA said. Due to appreciation of dollar, importers are forced to pay Tk 90,000 more for each car in April, which was Tk 75,000 in March. An importer opened letter of credit (LC) at the rate of Tk 69.50 per dollar, but he has to pay Tk four more against per dollar, as the rate of dollar reached Tk 74 at the time of bringing the car, he explained. Besides, Pakistan government has lifted the ban on import of reconditioned cars from last November. It is another reason of car price hike, as local importers are facing tough competition with the Pakistani importers. "A car which we could be bought earlier at $10,000, now costs $13000 due to this competition," he also said.
The demand for re-conditioned cars has dropped substantially due to high import duty, depreciation of local currency against the US dollar, and impact of Japan's recent natural disaster, traders said. They have claimed that the sale of reconditioned car has dropped by nearly 60 to 70 per cent because of these factors. However, customers blamed the traders for hiking the price of each car by Tk 3,00,000 to Tk 4,00,000 under different pretexts. Abdul Mannan Chowdhury, president of Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) said depreciation of taka against the US dollar, depreciation of the US dollar against yen, Japan's recent situation, and the government's tax measures are responsible for the price hike of reconditioned cars. Habibullah Dawn, former president of BARVIDA, blamed the absence of a long-term and stable tax policy on car import for the ongoing declining trend in sale. "The market experiences this kind of unstable situation every year, as the government revises tax on car import in every budget." He said price hike of all kinds of car is natural because of duty hike. The government, on an average, raised duty on cars by Tk 600,000 during the last two financial years. Moreover, depreciation of taka against dollar has also forced the importers to pay more duty, he added. "The Toyota Corolla car we used to sell at Tk 9,50,000 in 2009, is now being sold at Tk 19,50,000," he said. Replying a question regarding price hike of cars before the budget, he said it is natural to witness a price hike, if hints come from the government that it might impose higher duty on cars on the ground of reducing traffic congestion in the capital. "The duty hike has seriously affected the sale of reconditioned cars," he added. There were 100 to 150 Bangladeshi exporters in Japan, who supplied reconditioned cars to the local traders. The number has now declined to only 50, as most of them have switched to other businesses due to decline in local demand and price hike of cars, Mr Dawn claimed. "Sale at the city's car showrooms has dropped to half due to the government's high tax measures, appreciation of dollar, and Japan's recent disaster, resulting price hike of all kinds of car," Mahbubul Haque Chowdhury, former general secretary of BARVIDA said. Due to appreciation of dollar, importers are forced to pay Tk 90,000 more for each car in April, which was Tk 75,000 in March. An importer opened letter of credit (LC) at the rate of Tk 69.50 per dollar, but he has to pay Tk four more against per dollar, as the rate of dollar reached Tk 74 at the time of bringing the car, he explained. Besides, Pakistan government has lifted the ban on import of reconditioned cars from last November. It is another reason of car price hike, as local importers are facing tough competition with the Pakistani importers. "A car which we could be bought earlier at $10,000, now costs $13000 due to this competition," he also said.