Cyber car trade

Net your dream car

When private bank employee Nihad Ferdous got his long-cherished promotion last month, the first thing he wanted was to buy a car. “It was my dream. I had been working hard for years to do this,” he said.

However, with his modest budget of Tk 6 lakh, Ferdous’s search could not move beyond the usual lower-middle price segment of the reconditioned car market, which essentially meant the pre-2008 Toyotas or Nissans.
Then the 34-year-old expanded his search to online sellers and was surprised to see the wider choice of used cars on offer. Ferdous is now the proud owner of a 2010 Toyota Axio, which he bought for Tk 120,000 lower that what it would have cost him at a showroom or from a reconditioned car dealer.
“There are lots of e-commerce sites on which people sell off their belongings, including cars, directly. You don’t need to pay the extra bucks the fancy showrooms or the car dealers charge,” Nihad pointed out.
Assalutazzaman Rony, an IT professional, admitted that looking for used cars on e-commerce sites had become an obsession for him. “I want to buy a car and I want a fantastic deal, too. I believe that if I keep looking on the e-commerce sites or Facebook, I will be able to get the car and also the great deal,” he argued.
Rony said that before the advent of e-commerce sites or the social media, looking for cars was a totally different ballgame altogether. “You needed to have money, time, and dedication to visit car showrooms. Now, you can do it on a computer while utilising your work breaks. I believe this motivates young buyers like us to buy cars,” he claimed.
 
Rising trend
While improved infrastructure and greater household purchasing power have played their roles in pushing up the sale of reconditioned cars, the advent of social media and e-commerce sites have boosted the used cars market like never before.
Industry insiders and market projection say that sales will accelerate over the next five years. According to a 2015 study by Carmudi—an online marketplace for used and new cars—the internet was widely used to buy cars in Bangladesh during the year. Seventy per cent respondents said online platforms had highly influenced their decision.
The study said that for buying an automobile, 20 per cent of the respondents had said that internet searches were their main tool and 10 per cent had listed dealer websites as something that majorly influenced their purchases.
The Carmudi study said that Bangladeshi car dealers were increasingly going online, too, when it came to reaching buyers. It found that 70 per cent car dealers of the country focused on reaching their customers through online classified advertisements.
Car dealers in Bangladesh are waking up to the potential uses of social media. Twenty per cent reported that they were currently using social media, the report said.
Facebook—arguably the most popular social media platform in Bangladesh—was used by over 50 per cent car dealers in Bangladesh to advertise their listings, the report added.
 
Boon for all
But do e-commerce sites and social media pose a threat to the traditional forms of the trade? Abdul Hamid Sharif, president of the Bangladesh Reconditioned Vehicles Importers’ and Dealers’ Association (Barvida), does not think so.
“We also post ads of our cars on different e-commerce sites. A large section of our car buyers now comes from online sources,” said Sharif.
However, he pointed out that there were still some problems in buying cars from individuals than from a showroom. “You might get a car at a relatively cheaper price from an individual, but changes of ownership, registration, fitness and insurance are not easy to manage. Those are added to the car price,” he said.
Sharif, however, lauded the advent of the social media and e-commerce sites. “I consider this a complementing marketing platform for us,” he said.
According to him, reconditioned car sales are increasing by the year. “In the 2015–16 fiscal, the market grew 11 per cent more than the previous fiscal year,” he said.
Barvida data says that in 2015–16, 19,300 reconditioned vehicles were imported. In 2014–15, the corresponding number was 17,055; in 2013–14, it was 14,427; in 2012–13, it was 7,353.
The reconditioned car importers contributed Tk. 2,592.76 crore to the national exchequer in 2015–16. The respective amount in the 2014–15, 2013–14 and 2012–13 fiscal years were Tk 2,363.20 crore, Tk 1,885 crore and Tk 810.10 crore respectively.
 
What are the obstacles?
According to Sharif, the market of reconditioned cars is increasing mainly because of the rising buying capacity of people. “The economy of Bangladesh is growing continuously. A car is among the first things that people want to buy after their buying capacity rises because it is not only a facility but a status symbol too,” he pointed out.
Another strong reason behind the surge in car imports in the country is the availability of car loans. Now, a customer can easily get car loans from banks, which was not so easy in the past, he added.
The Barvida president, however, criticised the government policy on the existing depreciation rates. Now, the government allows depreciation rates of 15, 25, 35, 40 and 45 per cent on one-, two-, three-, four-, and five-year-old vehicles respectively.
“Though the government allows import of vehicles more than five years old, it has not increased the rate of depreciation on them,” Sharif pointed out. “Prices of old vehicles would have decreased even further had the government done that,” he added.
He also urged the government to settle the controversy over a vehicle’s age. Now, the government calculates a car’s age on the basis of its first registration date. Until very recently, a vehicle’s age was calculated on the basis of the manufacturing date inscribed on the chassis.
 
Horns of a dilemma
Sharif also said that reconditioned vehicle importers and dealers want special duty benefits on the import of reconditioned hybrid cars to increase the sale of eco-friendly vehicles in the country. “Before the 2016–17 budget, we had urged the government for this duty benefit, but it paid no heed to our appeal.”
While presenting the budget, finance minister AMA Muhith had mentioned that a concession on hybrid car duty on the basis of the engine cylinder volume had been proposed for revision because of “their importance as fuel-efficient and environment-friendly vehicles.”
According to budgetary measures, the supplementary duty on the import of new hybrid cars will be 30 per cent for 1500cc cars, and 45 per cent for reconditioned hybrid cars. For cars between 1501cc and 2000cc, the regular duty rate is 100 per cent, and for new hybrid cars, it is 60 per cent.
For cars between 2001cc and 2750cc, the regular duty rate is 200 per cent for reconditioned hybrid cars, and 150 per cent for new hybrid cars. The duty rate for reconditioned hybrid cars between 2751cc and 4000cc is 350 per cent and for new hybrid cars, it is 300 per cent. The duty for cars of above 4000cc remains the same for both new and reconditioned hybrid cars.
“Of the total number of imported cars, 85 per cent are reconditioned and 15 per cent are new. The government had told us earlier that duty benefits would be given to the import of reconditioned hybrid cars. But that did not happen. We want the same duty benefits to be given to new and reconditioned hybrid cars ones to see more eco-friendly vehicles on the streets of Bangladesh,” said Sharif.

Cyber car trade

Net your dream car

When private bank employee Nihad Ferdous got his long-cherished promotion last month, the first thing he wanted was to buy a car. It was my dream. I had been working hard for years to do this, he said. However, with his modest budget of Tk 6 lakh, Ferdouss search could not move beyond the usual lower-middle price segment of the reconditioned car market, which essentially meant the pre-2008 Toyotas or Nissans. Then the 34-year-old expanded his search to online sellers and was surprised to see the wider choice of used cars on offer. Ferdous is now the proud owner of a 2010 Toyota Axio, which he bought for Tk 120,000 lower that what it would have cost him at a showroom or from a reconditioned car dealer. There are lots of e-commerce sites on which people sell off their belongings, including cars, directly. You dont need to pay the extra bucks the fancy showrooms or the car dealers charge, Nihad pointed out. Assalutazzaman Rony, an IT professional, admitted that looking for used cars on e-commerce sites had become an obsession for him. I want to buy a car and I want a fantastic deal, too. I believe that if I keep looking on the e-commerce sites or Facebook, I will be able to get the car and also the great deal, he argued. Rony said that before the advent of e-commerce sites or the social media, looking for cars was a totally different ballgame altogether. You needed to have money, time, and dedication to visit car showrooms. Now, you can do it on a computer while utilising your work breaks. I believe this motivates young buyers like us to buy cars, he claimed. Rising trend While improved infrastructure and greater household purchasing power have played their roles in pushing up the sale of reconditioned cars, the advent of social media and e-commerce sites have boosted the used cars market like never before. Industry insiders and market projection say that sales will accelerate over the next five years. According to a 2015 study by Carmudian online marketplace for used and new carsthe internet was widely used to buy cars in Bangladesh during the year. Seventy per cent respondents said online platforms had highly influenced their decision. The study said that for buying an automobile, 20 per cent of the respondents had said that internet searches were their main tool and 10 per cent had listed dealer websites as something that majorly influenced their purchases. The Carmudi study said that Bangladeshi car dealers were increasingly going online, too, when it came to reaching buyers. It found that 70 per cent car dealers of the country focused on reaching their customers through online classified advertisements. Car dealers in Bangladesh are waking up to the potential uses of social media. Twenty per cent reported that they were currently using social media, the report said. Facebookarguably the most popular social media platform in Bangladeshwas used by over 50 per cent car dealers in Bangladesh to advertise their listings, the report added. Boon for all But do e-commerce sites and social media pose a threat to the traditional forms of the trade? Abdul Hamid Sharif, president of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida), does not think so. We also post ads of our cars on different e-commerce sites. A large section of our car buyers now comes from online sources, said Sharif. However, he pointed out that there were still some problems in buying cars from individuals than from a showroom. You might get a car at a relatively cheaper price from an individual, but changes of ownership, registration, fitness and insurance are not easy to manage. Those are added to the car price, he said. Sharif, however, lauded the advent of the social media and e-commerce sites. I consider this a complementing marketing platform for us, he said. According to him, reconditioned car sales are increasing by the year. In the 201516 fiscal, the market grew 11 per cent more than the previous fiscal year, he said. Barvida data says that in 201516, 19,300 reconditioned vehicles were imported. In 201415, the corresponding number was 17,055; in 201314, it was 14,427; in 201213, it was 7,353. The reconditioned car importers contributed Tk. 2,592.76 crore to the national exchequer in 201516. The respective amount in the 201415, 201314 and 201213 fiscal years were Tk 2,363.20 crore, Tk 1,885 crore and Tk 810.10 crore respectively. What are the obstacles? According to Sharif, the market of reconditioned cars is increasing mainly because of the rising buying capacity of people. The economy of Bangladesh is growing continuously. A car is among the first things that people want to buy after their buying capacity rises because it is not only a facility but a status symbol too, he pointed out. Another strong reason behind the surge in car imports in the country is the availability of car loans. Now, a customer can easily get car loans from banks, which was not so easy in the past, he added. The Barvida president, however, criticised the government policy on the existing depreciation rates. Now, the government allows depreciation rates of 15, 25, 35, 40 and 45 per cent on one-, two-, three-, four-, and five-year-old vehicles respectively. Though the government allows import of vehicles more than five years old, it has not increased the rate of depreciation on them, Sharif pointed out. Prices of old vehicles would have decreased even further had the government done that, he added. He also urged the government to settle the controversy over a vehicles age. Now, the government calculates a cars age on the basis of its first registration date. Until very recently, a vehicles age was calculated on the basis of the manufacturing date inscribed on the chassis. Horns of a dilemma Sharif also said that reconditioned vehicle importers and dealers want special duty benefits on the import of reconditioned hybrid cars to increase the sale of eco-friendly vehicles in the country. Before the 201617 budget, we had urged the government for this duty benefit, but it paid no heed to our appeal. While presenting the budget, finance minister AMA Muhith had mentioned that a concession on hybrid car duty on the basis of the engine cylinder volume had been proposed for revision because of their importance as fuel-efficient and environment-friendly vehicles. According to budgetary measures, the supplementary duty on the import of new hybrid cars will be 30 per cent for 1500cc cars, and 45 per cent for reconditioned hybrid cars. For cars between 1501cc and 2000cc, the regular duty rate is 100 per cent, and for new hybrid cars, it is 60 per cent. For cars between 2001cc and 2750cc, the regular duty rate is 200 per cent for reconditioned hybrid cars, and 150 per cent for new hybrid cars. The duty rate for reconditioned hybrid cars between 2751cc and 4000cc is 350 per cent and for new hybrid cars, it is 300 per cent. The duty for cars of above 4000cc remains the same for both new and reconditioned hybrid cars. Of the total number of imported cars, 85 per cent are reconditioned and 15 per cent are new. The government had told us earlier that duty benefits would be given to the import of reconditioned hybrid cars. But that did not happen. We want the same duty benefits to be given to new and reconditioned hybrid cars ones to see more eco-friendly vehicles on the streets of Bangladesh, said Sharif.