Sales of reconditioned cars have started picking up as political tensions are declining after the January 5 elections, importers said yesterday.
“An increased number of customers are buying cars now as prices are cheaper than in the last two years,” said Md Habib Ullah Dawn, president of Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida).
Most traders are selling 2-3 reconditioned cars a day, which was almost zero between October and December, as they had to keep their showrooms closed for political unrest, he added.
Car prices fell 15-27 percent over the last two years, depending on the model, mainly due to appreciation of the taka against the dollar and augmentation of tax benefits for importers of used cars, said Dawn, also managing director of Auto Museum Ltd.
The local currency strengthened around 5 percent against the dollar last year. The yen depreciated to 101 from 82.95 against the dollar in the same period.
Bangladesh usually imports used cars from Japan, which is about 95 percent of total imports a year, according to Barvida data.
Another reason behind the hike in sales is a change in the law of depreciation of a used car, said Dawn. Previously, an importer could enjoy a maximum of 35 percent depreciation on a five-year-old car; it is 45 percent this fiscal year. As a result, importers are receiving tax benefits.
Prices of a popular brand, the 1,500cc Toyota Corolla Axio, declined to Tk 16 lakh from Tk 22 lakh two years ago, said the association chief.
Mahbubul Haq Chowdhury Babur, chief executive of Star Automobiles that sells used cars in Chittagong, said, “More customers are buying cars due to the fall in prices and political stability.”
Traders however blamed Bangladesh Bank's restrictions on car loans for the fall in sales in the last two years.
Banks earlier financed up to 70 percent of the value of a car; the maximum limit now is 30 percent, said Dawn.
The import of used cars fell 23 percent to 7,353 units in 2012-13, from 9,588 units in the previous fiscal year, according to the association's data.
The imports of reconditioned cars rose 25 percent to 4,724 units in the first six months of this fiscal year from the same period a year ago.
Reconditioned cars account for 90 percent of the market and the rest is filled by new vehicles, Barvida says.