Luxury car sales slow to a near-stop

Sales of luxury sedans and sport utility vehicles (SUVs) have been almost nil since July this year as customers have reined in spending amid the ongoing economic downturn and sudden political changeover in Bangladesh.

According to various market insiders, sales have fallen by about 95 percent from around 800 units per month before August 5, when the Sheikh Hasina-led Awami League government was ousted by a mass uprising.

And although there is no credible data to back up this claim, Bangladesh Road Transport Authority (BRTA) data shows that around 734 SUVs were registered each month between January and September 2024.

However, there were no individual statistics on the registration of other types of premium cars as the BRTA tallies sedans in the normal vehicle class.

Besides, these figures exclude a small fraction of people who delay registering new vehicles.

Read more

Automobile sales drop amid economic downturn, political jitters

Saad Nusrat Khan, managing director of Progress Motors, said they have not sold even a single car since July although they normally sell around eight units per month.

Citing that there has been no footfall at their Tejgaon outlet amid the political shift and economic uncertainty, Khan informed they have incurred losses of around 1 crore since July.

Furthermore, they have to sell at least six units per month to cover operational costs.

Khan also voiced concerns about overall sales in the premium segment falling further as the BRTA recently imposed a carbon tax on electric vehicles even though they do not cause carbon emissions.

Progress Motors, the country's sole distributor of luxury vehicles designed by German automaker Audi AG, sells cars for between Tk 1.69 crore and Tk 3.99 crore.

As such, only the affluent class buy these cars.

But as business activities have slowed amid the prevailing economic downturn, they are not in the mood to spend such large sums of money on luxury items, Khan said while also blaming the lack of political stability for slowing sales.

Habib Ullah Dawn, president of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida), said luxury car sales have declined significantly since July as people have become apprehensive about the economy following the political changeover.

"They [customers] are in a panic about what may happen in the future," he added while pointing out that potential buyers are observing the situation before deciding on their purchase.

Dawn also said people are mostly purchasing comparatively cheaper sedans, such as the Toyota Axio and Toyota Corolla, rather than high-end units like the Toyota Camry and Toyota Crown.

Meanwhile, sales of SUVs like Toyota's Land Cruiser, Pajero and Harrier series are almost nil.

Additionally, the Barvida president said repeated depreciation of the local currency against the US dollar alongside import duty hikes have increased the cost of vehicles with higher engine capacity.

As a result, the prices of such cars increased by Tk 3-4 lakh over the past two months, he added.

Dawn also said it is good news for them that the law and order situation is improving day by day as customers will feel more comfortable visiting their showrooms.

Pointing out that car traders are struggling to pay operational costs due to reduced revenue, he said they are optimistic about making a rapid recovery, just as they had after the Covid-19 pandemic.

"Nobody imagined this type of dull market would suddenly come about," said Shafiqul Islam, head of operations at HNS Automobiles.

He said customers, particularly in the premium segment, preferred SUVs over sedans until the recent political changeover reversed this trend.

Also, the high interest rate on auto loans could be discouraging purchases, Islam added, saying that some dealers have been unable to release their previously imported vehicles from Chattogram port due to a lack of sufficient capital.

Arif Khan Bipu, managing director of Motors Bay, said sales in the normal segment are also declining as people have been grappling with inflationary pressure for more than two years.

Citing that the recent political changeover adversely impacted the market, he said the overall situation is not favourable for high-end car sales as potential customers are being financially cautious.