Imports, sales of reconditioned cars drop
Al Amin :
Both imports and sales of the reconditioned vehicles declined steadily due to price increases stemming from the increase in the price of US dollars and the prevailing macroeconomic vulnerability.
Following this, revenue collection from the sector also declined by 20 percent during the first four months (July-October) period of the current fiscal year (2023-24), according to data from the National Board of Revenue (NBR).
The data showed that the revenue board earned Tk212 crore as customs duty from the import of the reconditioned cars during the period, which was Tk 262 crore in the corresponding time of last fiscal year (2022-23).
Bangladesh Reconditioned Vehicle Importers and Dealers Association (BARVIDA) sources said that some 2,193 reconditioned cars were imported in July, but it reduced to 2011 in August, 1,792 in September and 1567 in October last year.
A Total of 22,154 cars were imported in the FY 2021-22, 19,803 in FY 2022-23 and 10,137 till November of the current fiscal year.
About the down trend of import, BARVIDA President Md Habib Ullah Dawn told The New Nation, “Bangladesh Bank instructed for 100 percent LC margin for import of luxury goods last year and we tried to open LC with the margin to continue their businesses.
But, the central bank issued in another circular imposing restrictions on importing such goods due to dollar crunch. As a result, import of such cars declined significantly.”
Along with the import restriction, unusual devaluation of local currency against the dollar is another reason behind the decline in imports and sales, he added.
“Despite the vulnerable macroeconomic situation, at least the government is allowing us to import cars so we can continue business.
But on top of everything else, we have to provide a 100 percent margin,” said Mohammad Shahidul Islam, Chairman of HNS group.
Although business was slow, importers would brave the lean patch by making nominal profits or attempting to break even, he added.
The automobile business is dependent on forex reserves and cars are luxuries, so they are related to the growth of the economy and stable economic situation,” he said, adding, “If the situation persists for this year, some dealers would be compelled to shut up their shops.”
Abdul Haque, Managing Director of Haq’s Bay Automobiles Ltd, reiterated that imports declined due to the dollar crisis, saying prices of cars increased due to the devaluation of the taka against the greenback.
At the same time, the impact of the dollar’s price hike was also felt in import duties, causing prices to increase.
According to Haque, the import duty for a high-end reconditioned car like a Land Cruiser or Pajero is more than Tk 1 crore.
Duties on mid-level and low-end cars have also increased, putting them beyond the reach of the middle class.
Haque, also former president of BARVIDA, suggested adjusting duties in order to reduce prices, increase sales and boost government revenue from this sector.