Car sales hit an all time high in the past year when importers released different types of vehicles worth Tk 2,070 crore.

The value for vehicle imports were about 30 per cent higher in 2008 compared to the same period of the 2007-08 fiscal, said a senior national board of revenue official quoting a recent study.

Luxury cars are seen at a showroom in Dhaka. Car sales continue to grow in the country despite slowdown. — New Age photo

The NBR study on luxury imports has been conducted to see the present trend in this area and suggest duty on those items for the next budget, he said.

The study reveals that the vehicle imports alone accounted for 25 per cent of the total luxury imports. The amount of luxury imports was Tk 8026.41 crore during July 2008 and March 2009 period.

The NBR officials expect that the amount of vehicle imports will increase further in the remaining two months of the current fiscal year as more vehicles have already reached the country’s main sea port in Chittagong.

The NBR allows 2688 products, known as luxury goods, to be imported under 25 per cent duty in addition of supplementary duty ranging from 60 per cent to 350 per cent. Apparently, different types of vehicle imports dominate the top 50 luxury products, they said.

The import of motor cars with engine capacity between 1000cc and 1500cc topped the list. In the first nine months of the current fiscal, importers released such cars, known as essential cars, valued at Tk 724 crore.

Car dealers said the availability of easy financing had fuelled the record sales in recent years.

‘More than 80 per cent of the cars we sell are being financed by private banks,’ said Abdul Haq, owner of leading car shop Haq’s Bay.

Haq, also president of the reconditioned vehicles dealers, pointed out that middle income people could now afford cars thanks to consumer financing facilities of the commercial banks and easy credit.

‘In addition, banks, big corporate houses give interest-free loans to employees to buy cars. It’s also now the most-frequently used incentive to convince the mid-level corporate officials,’ he added.

A record 14,944 new and reconditioned cars were sold in Dhaka last year, up 46 per cent from 2007, according to the Bangladesh Road Transport Authority.

An NBR official said it was imperative for the government to enhance duty further as the growing number of automobile import demonstrated that imposition of higher duty in the current fiscal did not discourage the automobile importers.

‘Duty enhance on import can be done to discourage import of motor vehicles,’ said transport expert Rahmatullah.

The former UN director, however, said this would not be viable because of possible negative impact on the economy.

Rahmatullah suggested other measures such as restriction of owning more than a car and the introduction of higher road tax.

Before introduction of such stringent measure he suggested for ensuring smooth and mass transport system to different class of commuters.

‘Otherwise, it will be injustice to the people, who are not used to present mode of transport system,’ he added.

Bangladesh is one of the few countries, along with China, where car sales continue to grow although the global economic slump has dented the vehicle sales in many countries.

Source: New Age