Sales of reconditioned vehicles have fallen in the port city in recent years due to a price hike. The trend is also likely to continue as the government, in this year’s financial budget, has only allowed the import of vehicles up to three years old and the prices of cars in the Japanese market have also gone up, says Sujauddin Mamun, proprietor of Maxim Car Centre.
He said car dealers are frustrated over the changes imposed in the budget for fiscal 2011-12. The import of five year old reconditioned vehicles is no longer allowed and as a result, prices will further go up on account of quality, he added.
“We will have to pay almost thirty percent more, but the government will only get a small portion,” he said, adding that it means the country will lose large sums of foreign currency.
Moreover, it will encourage importers to import sub-standard vehicles to offer competitive prices to clients, ultimately deceiving the clients, Mamun said.
Maxim Car Centre started business in the port city in 1985, at a time where there were no supplementary duties on vehicles with over eight seats, he said.
“But now, we have to pay 30 percent supplementary duty on vehicles with over eight-seats, like Noah, Voxy and so on,” Mamun said.
As a result, the prices of these vehicles have increased by more than two times, going beyond the purchasing ability of most clients.
Habibullah Don, ex-president of BARVIDA, also criticised the government’s decision to allow imports of three-year old vehicles or younger.
He said imports will decrease and the government will be deprived of taxes.
Now-a-days, a private vehicle is not an item of luxury; it is more of a necessity, said Mostafizur Rahman, proprietor of Car Choice that began operations in the port city in 1988.
He said when they first began business, Chittagong was a hub for cars; buyers from all over the country used to gather in the port city to choose their cars in the port shed.
Rahman said their company used to sell 50 automobiles on average a month at that time. Now, their sales have dropped to a dozen a month.
A major reason behind the drop in sales is the perilous journey to Chittagong from other parts of the country. “Now it takes a person 10 to 12 hours to commute to Chittagong from Dhaka, which is one of the main reasons why buyers avoid coming to Chittagong.”
Secondly, the increasing prices of reconditioned automobiles discourage buyers, he said.
“We now have to pay a 365 percent duty altogether on a reconditioned vehicle,” Rahman said.
“We used to offer a reconditioned Toyota Corolla in 2009 for Tk 9 lakh. The price for the same is Tk 20 lakh now.”
AKM Tauhidul Islam, director of Toyota Collection that started business in 1996 in Chittagong, said, “In the beginning, we used to sell 30 cars on average, which has now dropped to 10.”
A Tk 4.5 lakh 6-year old Japanese reconditioned Toyota car in 1996 now costs Tk 19.5 lakh due to the high tariffs, he added.
According to the international rules, if a car is five years old, 69 percent depreciation is deducted from its original price, Islam said. “In Bangladesh, depreciation is only 35 percent.”
He said importers are also losing interest in importing vehicles through Chittagong Port as port facilities are reducing day-by-day.
In Mongla Port, rent to place a car in the port shade is Tk 100 a day, which is Tk 495 in Chittagong Port, he said. “Importers outside Chittagong now prefer Mongla Port instead of Chittagong Port.”
Amar Dutta, an accountant at Kiea Car Centre that began business in 2008, said clients used to buy cars before declaration on the national budget. “The scene is totally different now.”
From selling 10 cars on average a month previously, they not sell 3. He blames the high duties for the fall in sales.
Kazi Shahidullah Babar, director of Zam Zam Car and Automobile Ltd, said Chittagong has lost its glory as the hub for car trade because of some wrong steps taken by the government.
Port facilities are being cut drastically and the dilapidated condition of the Dhaka-Chittagong highway deters customers from coming to Chittagong to buy cars.
Some traditional car traders in Chittagong have shifted their businesses to Dhaka as they found it to be more convenient, said Babar.
Diminishing car loan facilities by commercial banks is another reason behind the fall in sales, he said. ”Banks now provide 50 percent in loans, which was up to 80 percent before.”
Mohammed Sayem, proprietor of Showdagar trading, said it is primarily government policy that suffocates the car business.
In 2002, when the government stopped giving permission to import reconditioned cars, the business struggled to exist and clients got frustrated, he said. The business later got back life after the government took back its decision.
“We are paying taxes and all sorts of duties, but the government is neglecting us,” Sayem said.
He said port facilities should be increased. “We don’t have any legal pass to enter the port, but as an importer I have the right to be there.”
The Chittagong Port Authority (CPA) restricted entry into the port shed as a measure to combat theft. “But as buyers are not allowed to enter the shed, they are discouraged from coming to Chittagong to buy cars.”
Commodore M Anwarul Islam, chairman of CPA, said they took the decision to restrict entry after complaints of theft of different vehicle parts from the port-shed. “After imposing the decision, stealing of vehicle parts from the port-shed has stopped.”
“The port-shed is not a show-room.”
-With The Daily Star input
