Sales of imported reconditioned cars have marked a significant rise over the last couple of months thanks to the decline in their import cost following depreciation of the US dollar and Japanese yen against the local currency.
Sources said now an importer can enjoy a maximum of 45 per cent depreciation on a five-year-old car; which was 35 per cent earlier. So importers are having tax benefits, resulting in a sharp fall in the car price.
The local currency strengthened around 6.0 per cent against the US dollar and 20 per cent against the Japanese yen in last one year and as a result the import price also fell significantly.
However, during visits to some car sale centres in the city, this correspondent found that the price of a popular brand -- 1,500cc Toyota Corolla Axio -- declined to Tk 1.6 million from Tk 2.2 million one and a half years ago.
The Vitz brand 1000cc car is now selling at Tk 1.2 million which was Tk 1.7 million in last fiscal year (FY 2012-13) while the price of a Premio brand car declined to Tk 3.3 million from Tk 3.8 million one year ago.
"The imported reconditioned car sale rose more than 30 per cent in recent times, thanks to the price fall," President of Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) Habib Ullah Dawn told the FE.
He said a large number of customers are buying cars now as prices are cheaper than those of the last two years.
Mr Dawn, also managing director of Auto Museum Ltd, said in last one year prices of imported reconditioned cars fell more than 15-30 per cent depending on the model, mainly due to appreciation of the taka against the dollar and yen and augmentation of tax benefits for importers of used cars.
He said now most traders are selling 20-25 reconditioned cars a month, which was 7-10 units in 2013.
According to BARVIDA, a total of 10,879 units of cars were imported in first nine months (July-March) of the current FY, 2013-14, whereas the number was 7,353 units in total for the last FY.
On the other hand, the Bangladesh Road Transport Authority (BRTA) data shows in last three months (January-March 2014) more than 3,624 new and reconditioned cars have registered with the authority.
BRTA data also shows the number of registered motor cars has increased to 10,472 in 2013 calendar year from 9,224 in 2012.
Managing Director of Falcon Auto Limited ABM Anisuzzaman told the FE: "Sale of imported reconditioned cars increased more than 25 per cent in last couple of months compared to the same period last year."
He said previously, an importer could enjoy a maximum of 35 per cent depreciation on a five-year-old car, but now it is 45 per cent; so the importers are having tax benefits.
He said the local currency strengthened around 6.0 per cent against the US dollar and 20 per cent against the Japanese yen in last one year.
Managing Director of Haq's Bay Abdul Haq told the FE that availability of credit for car purchase on easy terms is also another main cause for the increase of car sales in the country.
Many cars are being sold at our outlet on credit facility provided by private banks and the credit repayment is quite satisfactory, he added.
Secretary General of BARVIDA Mahbubul Haq Chowdhury Babu said: "A large number of companies including banks, insurances, leading conglomerates and garment buying houses are now providing interest-free loans to their employees to purchase cars".
He said Toyota Corolla, Toyota Premio and Allion cars are still popular in the local market.
Traditionally, Bangladesh imports reconditioned cars from Japan, which constitute about 95 per cent of total imports a year, he added.
According to BARVIDA data, the government received Tk 13 billion as revenue in first nine months of the current FY from import of reconditioned vehicles.
The amount was Tk 8.10 billion in the FY 2012-13 and Tk 13.35 billion in the FY 2011-12.
Some 90 per cent of the imported cars that were sold in the country were old ones while 10 per cent were brand new.
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