Vehicle, spare part imports surge 59.7pcImports of vehicles and their spare parts jumped 59.7 percent in the first nine months of current fiscal year, as demand for heavy-duty vehicles and passenger cars surged following normalisation in supply situation after the end of the India-imposed trade blockade.
Imports of vehicles and their spare parts jumped 59.7 percent in the first nine months of current fiscal year, as demand for heavy-duty vehicles and passenger cars surged following normalisation in supply situation after the end of the India-imposed trade blockade.
The country’s vehicles and spare parts import bill soared to Rs63.29 billion in the nine-month period between mid-July and mid-April, compared to Rs39.64 billion recorded in the same period a year ago, according to the data from the Trade and Exports Promotion Centre (TEPC).
Government officials attribute the surge in imports to base effect, as blockade imposed by India and devastating earthquakes of 2015 had sent automobile business into a tailspin in the fiscal year 2015-16.
Data from the Department of Transport Management (DoTM) revealed that 263,817 units of new vehicles rolled onto the streets of the country in the first eight months of the current fiscal year. The data also showed that the demand for heavy duty vehicles, pick-up trucks, three-wheeler tempos and power trailer tractors have remained high.
Shambhu Prasad Dahal, vice president of the Nepal Automobile Dealers’ Association (Nada), said that the boom in construction business had raised demand for heavy duty vehicles, while three-wheeler tempos were selling well in major cities across the country.
Also, demand for motorcycles have continued to rise, with 199,908 units of new motorcycles hitting the streets in the first eight months of 2016-17. Among others, 17,171 units of new cars, sports utility vehicles and vans were registered in the first eight months of this fiscal year. Nepal imports most of the vehicles and spare parts from India.
Mohan Thapa Magar, head of the finance department at the DoTM, said that people’s interest in vehicles, which had dipped after 2015 earthquakes and the subsequent trade blockade, have rejuvenated, which was reflected in imports figures.
“Around 5,000 vehicles were stuck at various border points due to the trade blockade. These vehicles have now entered Nepal,” Dahal said, adding, “The NADA Auto show held in August too gave a much needed impetus to the automobile sector.”
Also, easy availability of loans after the end of the trade blockade in February 2016 helped push vehicle sales.
However, the situation is quite different now as banks and financial institutions are facing a shortage of funds that could be immediately extended as loans.
Lately, the central bank too have been discouraging banks and financial institutions from channelling credit towards unproductive sectors such as automobile.
In the third week of February, the central bank restricted banking institutions from extending more than 50 percent of the value of the vehicle as credit to auto loan seekers. This directive meant that those looking for auto loan must pay at least 50 percent of the vehicle’s value upfront at the time of purchasing one.
“After this directive came into effect, vehicle sales have dipped 50 percent,” Dahal said, adding that interest on automobile loans too has increased to around 9-12 percent per annum.
Though the central bank had stated that one should pay at least 50 percent of the vehicle’s value, most of the automobile dealers bypass the 50 percent limit using a loophole wherein people can actually pay just 30 percent of the vehicle’s value upfront. The remaining 20 percent is then injected by dealers, which could be paid in installments.