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Reconditioned car industry needs policy support to recover from the pandemic

  • Published at 05:48 pm May 5th, 2021
Reconditioned car industry infograph

In Bangladesh, compared to new cars, the demand for reconditioned vehicles is much higher among buyers

The reconditioned car industry, like most other industries, has not been faring well amid the pandemic, according to industry insiders.

“We have not received a single penny’s worth of support from the government amid the pandemic, but the industry has paid heavy taxes,” Abdul Haque, president of Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida), told Dhaka Tribune on Tuesday. 

“We need major policy support and changes for the betterment of the automobile sector in Bangladesh,” he added.

Earlier at a press conference last month, Barvida had said they did not receive any loans from the government's incentive packages aimed at recovering from the coronavirus pandemic. 

Despite a concession on port fares for container transport at the Chittagong port, Barvida repeatedly applied, but did not receive a waiver of port charges due to the general holiday enforced last year to curb the spread of Covid-19.

Barvida also stated that the environmentally-friendly cars produced in Japan with resale value are the first choice by the local customers.

So, the association was skeptical whether the new vehicle manufacturing plants in the country will be a step in the wrong direction or not.

Abdul Haque cited a Japan International Cooperation Agency (JICA) survey, which said that it is feasible to establish the country’s own car-making plant if 100,000 vehicles are sold in the domestic market annually in Bangladesh.

However, in Bangladesh, some 10,000-20,000 units of cars are sold in a year.

So, the government needs to take measures to expand the local car markets before going for local production and aiming to export locally-produced cars.

Also Read: Barvida presses for stability in reconditioned car industry

In Bangladesh, compared to new cars, the demand for reconditioned vehicles is much higher among buyers due to trust, affordability, and availability of parts, the Barvida president told Dhaka Tribune. 

“Japanese cars sell like hot cake in the Bangladeshi market because of their value for money,” he added.

Haque said CC limit rationalization for cars is urgent as the government is losing a lot of revenue by levying heavy taxes and duties. 

“Sales of cars among the rising middle-income consumers is going to increase as Bangladesh is set to graduate into a developing nation from a least developed country [LDC],” he explained.

Haque urged to reduce the discrimination between tariffs on the import of reconditioned cars and new ones for the greater interest of the expansion of the market.

There is no alternative to diversification of exports to maintain the momentum of the country's economy, the Barvida president added. 

“In this case, the automobile sector can make an important contribution. To this end, a five-year tax exemption is required to encourage joint investment in the development of local industries for the manufacture of parts used in cars and a supportive tariff policy of at least 5-10 years. 

“We must encourage expatriate Bangladeshis to invest here in this sector,” he added.

According to Haque, the light engineering industry needs to come forward to accelerate the development of the automobile sector in Bangladesh. 

Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman said that according to the Bangladesh Road Transport Authority (BRTA), motor vehicle registrations in Bangladesh fell by about 24% in 2020. 

According to the Bangladesh Customs and Barvida data, the government earned Tk686.77 crore in revenue from the import of 3,438 reconditioned cars in the July-November of FY20, compared to 5,007 units in the corresponding period of the previous year.

Previously, the sector added Tk1,456.11 crore in revenue from 12,502 imported reconditioned cars in FY19, which was Tk2,649.95 crore from the import of 23,075 such vehicles in FY18.