Sales of reconditioned cars on the rise
Sales of reconditioned vehicles have climbed in recent months following the government's approval to import vehicles aged up to six years, tied with a fall in the prices of used cars in the Japanese market.
According to the Bangladesh Reconditioned Vehicle Importers and Dealers Association (Barvida), around 12,000 units of reconditioned vehicles were imported in the country in fiscal 2007-08. The trend shows that over 20,000 units of reconditioned vehicles will be imported in the country this year, which means about 60 percent growth over the previous year.
"Prices of used cars have decreased in the local market because their prices have dropped by $1,000 to $3,000 in the Japanese markets, in recent times, despite the Japanese currency appreciating against the dollar," said Abdul Haque, president of Barvida.
He said the average price of each vehicle has decreased at least by Tk 1 lakh, due to the price reduction.
Currently, a reconditioned Toyota Corolla is available at around Tk 10 lakh in local markets, which was priced at around Tk 12 lakh last year. Similarly, the prices of microbuses have decreased by Tk 1.5 lakh to Tk 3 lakh, thanks to a drop in prices in the Japanese market, said Haque.
"We guess that this year around 20,000 reconditioned vehicles will be imported, as demand has increased following the price fall, " said Abdul Hamid Sharif, secretary general of Barvida.
This year, the government has also changed its policy regarding import of old cars, allowing traders to import up to 6-year-old vehicles, while they could previously import a maximum of 4-year old vehicles.
"Inflow of reconditioned vehicles increased in the country after the decision was made effective because earlier it was difficult to import old cars as people in Japan typically use a new car for five to six years," said Haque.
As old cars, aged four years, were rare, prices were also higher, he said.
Another strong reason behind the surge in car imports in the country is because of the availability of car loans.
"Now a vehicle importer can easily manage loans for importing cars that is also fuelling the purchase of vehicles," said the Barvida secretary general.
Now a customer can easily manage a car loan from banks, which was not so easy in the past, he added.
The vehicle importers, however, criticised the government policy on the existing depreciation rates. Now the government allows year-wise depreciation rates 5, 10, 20 and 30 percent respectively on one, two, three and four to six-year old vehicles.
"Though the government has allowed imports of six-year-old vehicles, it has not increased the rate of depreciation on them," said Haque. Prices of old vehicles would have further decreased if the government increased depreciation on 6-year old vehicles.
Now the government allows 30 per cent depreciation on both four-year and six-year old vehicles, which importers said is illogical.
The vehicle importers also urged the government to settle the controversy over vehicle age, as, according to them, the existing age counting system discriminates the duty structure.
Now the government counts a car's age on the basis of its first registration date, while until the present year, vehicles' age was counted on the basis of the manufacturing date inscribed on the vehicle's chassis.
"If vehicle's age is counted on the basis of its manufacturing date, all vehicles manufactured in a certain year will be under the same duty slab. But if vehicle's age is counted on the basis of the first date of registration, a vehicle of one-year-old and another one of 13 months will be under a different duty structure, although they were manufactured in the same year, said Haque.
The present age counting method creates a difference on duty between Tk 40,000 to Tk 70,000, manufacturers said.
However, the high court stayed the new regulation for three months on Sept 3 on a writ petition filed by the association.