Market share of reconditioned Japanese vehicles
Low quality Indian, Chinese cars occupy major stake
Published : Tuesday, 11 December 2012
Financial Express :: Financial Newspaper of Bangladesh
Badrul Ahsan
Low quality Indian and Chinese vehicles are increasingly occupying a big local market share of traditionally popular 'made in Japan' vehicles for price factor, market operators said.
According to the National Board of Revenue (NBR) data, import of Indian and Chinese vehicles has increased by around 500 and 100 per cent respectively in just three years (from 2010 to 2012).
On the other hand, reconditioned vehicles import from Japan has drastically fallen by over 80 per cent during the same period, the NBR data showed.
Md Abdul Hamid Sharif, a leading importer of Japanese reconditioned vehicles in Bangladesh said that the valuation discrimination between reconditioned and brand new cars is mostly responsible for the gloomy situation.
Besides, banks' decision not to provide more than 30 per cent financial support of the total cost of a car has also contributed to drop in sales of Japanese vehicles. Previously banks would finance up to 70 per cent of a car's total value, he added.
He also said that over 50 showrooms of reconditioned cars have been closed during the last two years and some other car outlet owners have switched over to other business like shoe, food, etc due to unfavourable business environment in the country.
"Pricing discrimination has created an uneven competition among new and reconditioned vehicle business in the country which caused a drastic fall in reconditioned car import from Japan in the recent years," Sharif also ex-president of Bangladesh Reconditioned Vehicle Importers and Dealers Association (BARVIDA) told the FE Sunday.
"The brand new cars had 15 to 20 per cent market share which has grown to 40 to 45 per cent whereas imported reconditioned cars had 90 per cent market share that has come down to less than 40 per cent in just last three years mainly due to the price manipulation."
According to BARVIDA, the government from the fiscal year 2009-10 has been collecting duties on new car import based on the price declaration by the importers but at the same time it follows book value while collecting duties of reconditioned car import which has widened price gap between new and reconditioned cars in recent times.
Abdul Mannan Chowdhury Khasru, immediate past president of BARVIDA said that as the buyers cannot manage required financial support from the banks they go to procure the low cost and low quality Indian and Chinese vehicles.
"A Japanese vehicle can be used over thirty years by changing hands but low quality Indian and Chinese vehicles cannot be used more than three to four years due to its short life span," Khasru said.
However, refuting the allegation of price manipulation and inferior quality, the local agents of Indian vehicles in Bangladesh said that better quality and design lured the buyers to choose their vehicles in recent time.
"Quality of the India made vehicles is better than anytime which helped us capturing a significant market share of the country," Abdul Matlub Ahmed, chairman of Nitol Niloy Group and sole agent of India's biggest auto brand TATA in Bangladesh told the FE.
No dealer or distributor of China made vehicles in Bangladesh wanted to comment on the issue.
The NBR data showed that new vehicles import from India and China was around 10,632 and 5179 units respectively till November of the current year (calendar year-2012) which was around 1,222 and 2,900 units two years back (in 2010).
But the import of reconditioned vehicles from Japan till December 6, 2012 was 11,836 units which were 54,341 in 2010, the NBR data revealed.
According to a market visit, this correspondent found that a reconditioned TOYOTA Corolla-6 Model car is being sold at Tk 2.2 million price of which was less than Tk 1.4 million three years back. On the other hand, similar category of a brand new car made in India and China was being sold at around Tk 1.0 million to 1.3 million.
