Car sales drop for 2nd year on economic downturn, ridesharing services

Shakhawat Hossain | Published: 21:58, Jan 19,2020


A file photo shows two clients inquiring about a car at a showroom in Dhaka. Car sales have dropped for the second consecutive year in 2019 due to continued slump in demand amid slowing economic activities, according to government data. — New Age photo

Car sales have dropped for the second consecutive year in 2019 due to continued slump in demand amid slowing economic activities, according to government data.

Besides, an increase in ownership costs and nagging traffic in the capital and its surrounding cities led many prospective buyers to withhold their car buying plans, said car dealers.

The dealers also said the necessity of having cars was also decreasing as ridesharing services Uber and Pathao were meeting the demand for car for many in the expanding capital city in absence of reliable mass transportation services.

The Bangladesh Road Transport Authority registered 16,783 passenger cars in 2019, down from 18,299 in 2018 and 21,959 in 2017.

The registration of microbuses slumped to 3,683 in 2019 from 4,137 in 2018 and 5,575 in 2017 while the registration of pick-ups decreased to 11,952 from 13,907 in 2018 and 13,512 in 2011.

The registration of jeeps, purchased mostly by the government with different project funds and higher-class people, grew slightly to 5,630 in 2019 from 5,555 in 2018 and 5,425 in 2017.

Uttara Motors sales head Golam Mostafa told New Age on Saturday that the government was still the single biggest buyer of the brand new cars as it procured 50 per cent of the annual sales.

He said the brand new car segment held at least 12 per cent of the overall passenger car market dominated by the reconditioned cars imported from Japan.

He said the sales of both reconditioned and new cars were falling for the last two years in the private sector level because of decreasing buying capacity, traffic jam in the capital and increase in ownership costs.

The government now charges the same annual fees for cars irrespective of their cylinder capacity, which according to him, increases the owing cost of lower CC cars.

Apart from the growing number of cars being registered with ridesharing services Uber and Pathao, a decrease in loan-equity ratio to 50 per cent since 2015 from 70 per cent for purchasing car is another reason for the decline in car sales.

According to Uber, more than 10 lakh residents of Dhaka took trips with the company in August-October, 2019.

Ridesharing entities like Uber and Pathao were also a reason for the reduced sales of used car, said Abdul Haque, president of the Bangladesh Reconditioned Vehicles Importers and Dealers Association.

He also said liquidity crisis, overall economic downturn and tax policy were other major reasons for a sharp decline in import of reconditioned cars from Japan.

He claimed that the import of used cars declined by nearly 50 per cent in 2018-19 and the July-November period of the current fiscal year.

He criticised the government for discriminatory tax policy as the prices of reconditioned vehicles, in some cases, became double than that of the new ones due to taxes.

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