Sales slump by 30pc
A crippling 821 percent duty – highest in the world – imposed by the government on reconditioned vehicles has reduced sale by 30 per cent in recent months.
The reconditioned cars business is in the doldrums because of staggering import duties. Taxes have also hit the sale of brand new cars.
Sector insiders said many reconditioned car traders have already diversified their business while others are about to shut down their business to save their dwindling investments.
“We used to sell a reconditioned Toyota Corolla for Tk 0.9 million in 2008 but its price has now shot up to Tk 2.1 million,“ said M Habibullah Don, former president of Bangladesh Reconditioned Vehicle Importer and Dealers Association (BARVIDA).
Pulling the market down are duty-hike on car imports, high cost of fitness renewals and the rising rate of Japanese yen against US dollar.
Today the middle class can’t afford Japanese reconditioned cars, although they made up the biggest chunk of the buyers during 2008-2010, the boom period in car trade.
The sales of cars have shrunk by a quarter in the last few months badly hitting government revenue.
“The government has increased duty on reconditioned cars by up to 821 per cent which is unprecedented in the world,” moaned Habibullah.
The duty hike on old imported cars hasn’t helped increase government revenue. It has only created an opportunity for new car importers to under invoice the quotations.
The former BARVIDA chief has sought government protection for a sector that directly or indirectly employs 100,000.
“Earlier, revenue authorities collected Tk 30 billion as duty from reconditioned car import but I think this year the board will not able to get more than Tk 15 billion from the sector,” he said.
Import of reconditioned cars witnessed the biggest boom in the country’s history in 2008 and 2009, boosted by a surge in bank finance and a buying spree by the emerging middle class.
In fiscal 2008-09, car imports hit a record 31,097. During fiscal 2007-2008, some 23,000 cars were sold in the country. Of these, around 86 percent were in the capital, according to the data of BARVIDA.
Local car importers now can import up to three-year old cars, a traders said adding it would encourage import of new but low quality cars, particularly from the neighbouring country.
Earlier, they were allowed to import cars up to five-year old.
-With Daily Sun input
