821pc duty sends reconditioned car market crashing: Sales slump by 30pc

[CaPtAiN_pLaNeT]

821pc duty sends reconditioned car market crashingSales slump by 30pc→

821pc duty sends reconditioned car market crashing : firstpage : daily sun

Md Iqbal Hosen
A crippling 821 percent duty - highest in the world - imposed by the government on reconditioned vehicles has reduced sale by 30 per cent in recent months.

The reconditioned cars business is in the doldrums because of staggering import duties. Taxes have also hit the sale of brand new cars.

Sector insiders said many reconditioned car traders have already diversified their business while others are about to shut down their business to save their dwindling investments.

“We used to sell a reconditioned Toyota Corolla for Tk 0.9 million in 2008 but its price has now shot up to Tk 2.1 million,“ said M Habibullah Don, former president of Bangladesh Reconditioned Vehicle Importer and Dealers Association (BARVIDA).

Pulling the market down are duty-hike on car imports, high cost of fitness renewals and the rising rate of Japanese yen against US dollar.

Today the middle class can’t afford Japanese reconditioned cars, although they made up the biggest chunk of the buyers during 2008-2010, the boom period in car trade.

The sales of cars have shrunk by a quarter in the last few months badly hitting government revenue.

“The government has increased duty on reconditioned cars by up to 821 per cent which is unprecedented in the world,” moaned Habibullah.

The duty hike on old imported cars hasn’t helped increase government revenue. It has only created an opportunity for new car importers to under invoice the quotations.

The former BARVIDA chief has sought government protection for a sector that directly or indirectly employs 100,000.

“Earlier, revenue authorities collected Tk 30 billion as duty from reconditioned car import but I think this year the board will not able to get more than Tk 15 billion from the sector,” he said.

Import of reconditioned cars witnessed the biggest boom in the country’s history in 2008 and 2009, boosted by a surge in bank finance and a buying spree by the emerging middle class.

In fiscal 2008-09, car imports hit a record 31,097. During fiscal 2007-2008, some 23,000 cars were sold in the country. Of these, around 86 percent were in the capital, according to the data of BARVIDA.

Local car importers now can import up to three-year old cars, a traders said adding it would encourage import of new but low quality cars, particularly from the neighbouring country.

Earlier, they were allowed to import cars up to five-year old.

 

[InFn-0]

Actually, the duty on cars depend upon its cc, regardless of new or reconditioned, the highest cc bracket has 821pc duty. In the current duty structure pretty much everything above 2000 cc is unbuyable, that is why the dealerships like Mercedes, BMW and Audi dealerships are bringing 2000cc vehicles. Bad for both businessmen and buyers, govt needs to ask who is benefiting as the revenue generated from this duty on cars is not going to the roads either, considering their condition.

The government is trying to solve the traffic jam crisis by stopping people from buying cars, instead of making more infrastructure, which never worked and never will . Ultimately people will buy cars, whether it is cheaper cars or used cars, you cannot stop them, regardless of how much duty you put on them, as this has been proven again and again in the case of Bangladesh. This is a classic case of wrong medicine for wrong disease.

 

[Arko]

high import duty can work as an incentive for manufacturers assemble cars in BD. that should help develop the sector just like it did to India ........ look at their industry now ...... in 10 years we will have most of our cars assembled here in BD if not fully manufactured.

Manufacturing from scratch is a tough job requiring extensive backward linkage facilities. Assembly on the other hand is quite simple. Affordability, over the years, have increased to a great level. The market has grown to a big enough level that can support local assembly plants.

---------- Post added at 11:15 PM ---------- Previous post was at 11:15 PM ----------

high import duty can work as an incentive for manufacturers assemble cars in BD. that should help develop the sector just like it did to India ........ look at their industry now ...... in 10 years we will have most of our cars assembled here in BD if not fully manufactured.

Manufacturing from scratch is a tough job requiring extensive backward linkage facilities. Assembly on the other hand is quite simple. Affordability, over the years, have increased to a great level. The market has grown to a big enough level that can support local assembly plants.

 

[Zabaniyah]

Actually, the duty on cars depend upon its cc, regardless of new or reconditioned, the highest cc bracket has 821pc duty. In the current duty structure pretty much everything above 2000 cc is unbuyable, that is why the dealerships like Mercedes, BMW and Audi dealerships are bringing 2000cc vehicles. Bad for both businessmen and buyers, govt needs to ask who is benefiting as the revenue generated from this duty on cars is not going to the roads either, considering their condition.

The government is trying to solve the traffic jam crisis by stopping people from buying cars, instead of making more infrastructure, which never worked and never will . Ultimately people will buy cars, whether it is cheaper cars or used cars, you cannot stop them, regardless of how much duty you put on them, as this has been proven again and again in the case of Bangladesh. This is a classic case of wrong medicine for wrong disease.

It's funny actually. I wonder where all the tax revenue goes. Many of the roads in Dhaka are in pretty bad shape.

A Prado costs 150 lacs People can barely afford a Corolla.

This government is using the wrong policies to address the problems.

high import duty can work as an incentive for manufacturers assemble cars in BD. that should help develop the sector just like it did to India ........ look at their industry now ...... in 10 years we will have most of our cars assembled here in BD if not fully manufactured.

The parts needed to manufacture cars in Bangladesh come from abroad. And those parts are taxed as well.

 

[Arko]

The parts needed to manufacture cars in Bangladesh come from abroad. And those parts are taxed as well.

But not as much as the reconditioned cars i believe.

Anyway, i was just stating an idea here and was not considering the detailed facts here

 

[Patriot]

And i thought 400% duty on imported cars in Pakistan was bad - Audi A4 or BMW 3/5 Series here cost more then 1 crore! (100k$+)

 

[InFn-0]

Regarding assembling of vehicles, the assembled vehicles also need to pay same amount of tax like the imported ones. I know it does nt really make sense but similarly much of what our government does makes no sense either. This is one of the reasons why Mitsubishi is going slow with their production, government really needs to sort this out.

 

[InFn-0]

And i thought 400% duty on imported cars in Pakistan was bad - Audi A4 or BMW 3/5 Series here cost more then 1 crore! (100k$+)

3 series and c class is more than $100 000 in Bangladesh, and 5 series(520d) and E class (E200) more than $170 000. These are ofcourse the starting prices...lol. And if you want the new S Class, new 7 series, Range Rover Sport or even new Land Cruiser, you can gladly pay $500 000. And you would be surprised to know it, many people have actually paid that much recently.

And one more outlandish rule is MP's dont have to pay any tax on vehicles. Ironic how people who vote to impose these taxes on us dont have to pay any.

 

[eastwatch]

In today's Bangladesh, cars are a necessity for most of the middle class people. During 1991 to 1996 period taxes/duties were within limits so that even a middle class family could dream of buying someday a car. But, during the next AL govt. 1996-2001 duties were increased. I thought, the next BNP govt will certainly decrease this to an affordable rate. But, the new govt also again increased taxes.

Now, again the present AL govt has also increased duty on imported reconditioned cars. Moreover, it has put a ceiling, the cars cannot be older than three years. The car importers organization BARVIDA resisted the effort and the govt has finally put on a moratorium on this limt, as far as I know. However, the moratorium will be lifted in January, this is what I have heard. Govt. says of rod jamming as the main reason. Another reason is the ballooning oil import bill.

Govt is inefficient, it is unable to widen and repair old roads. New roads are not also being constructed. Bus service is very poor. Train service is almost non-existent. All due to ruling party's inefficiency. But, these same people are forcing common people to suffer for their own failings.

 

[acetophenol]

It's funny actually. I wonder where all the tax revenue goes. Many of the roads in Dhaka are in pretty bad shape.

A Prado costs 150 lacs People can barely afford a Corolla.

This government is using the wrong policies to address the problems.



The parts needed to manufacture cars in Bangladesh come from abroad. And those parts are taxed as well.

man!you've got to kidding me!

 

[InFn-0]

here is the tax list

0 - 1000 cc 102%
1001 - 1650 cc 124%
1651 - 2000 cc 208%
2001 - 2700 cc 436%
2701 - 4000 cc 591%
4000 cc and up - 850%
Hybrid Cars (Upto 2000CC) - 60% (Hybrid cars above 2000cc are not allowed)