Prices of imported reconditioned cars are set to rise on the local market due to a limited number of used vehicles available in Japan following the recent devastating earthquake and tsunami.
Importers said auctions for reconditioned cars, from where agents purchase for Bangladeshi buyers, are not being held regularly due to the ongoing crisis in Japan.
A record 8.9 earthquake and subsequent tsunami on February 11 broke the supply chain of the major reconditioned car exporter for Bangladesh.
"Even if some auctions are being held in Japan, the Japanese people are also bidding, as many of their cars were washed away by the tsunami," said Habib Ullah Dawn, an importer.
"As a result, we are forced to buy a car at $12,000 now, up from $10,000 on average a few days ago. Our customers now have to bear the extra cost," Dawn, owner of Auto Museum, told The Daily Star yesterday.
Reconditioned cars account for 90 percent of about 40,000 cars imported a year, and Japan controls 95 percent of the market.
Both new and used cars from Toyota, Honda, Nissan and Mitsubishi commonly ply Bangladeshi roads. Of them, Toyota account for 75 percent of the country's growing market.
Abdul Hamid Sharif, chairman of Autocon Group, said the prices of used cars have already gone up. "New production in Japan is being hampered seriously as the earthquake and tsunami have inflicted damage on component plants. This will not go very soon."
"People will not sell their old cars if they cannot buy new ones. As a result, we are getting a fewer cars to import. Besides, the local demand for old cars is rising in Japan, as many have lost their cars in the calamity."
Sharif, also the secretary general of Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida), the industry lobby group, said the ongoing electricity crisis triggered mainly by the shutdown of nuclear power plants, is hampering the industry. "The auction houses in Japan cannot run without electricity."
Local Bangladeshi buyers are already facing a triple whammy. The government, in the current budget, has increased tax on imported cars. The stronger US dollar and Japanese currency against the taka pushed the prices of reconditioned cars up significantly. And now comes the earthquake and tsunami effect.
Due to a rise in tax in the current fiscal year, the prices of imported cars have gone up by Tk 3 lakh to Tk 3.5 lakh each car, according to the importers.
From this March, the prices of small cars such as Toyota Allion, Corolla and Premio have gone up by Tk 60,000, while the prices of sport utility vehicles such as Land Cruiser Prado have increased by Tk 4-5 lakh, as both the yen and US dollar are getting stronger.
Sharif admits that some businessmen could exploit the situation in Japan and increase the prices. "But there are some valid reasons for the upward trend in the car prices."
Mahbubul Haq Chowdhury Babur, owner of Chittagong-based Reference Point, said the supply from Japan could face problems, as fewer cars are being put on auction in Japan.
He said the rise in prices is expected to continue in the coming months. "As a result, the cars may be too pricey for the middleclass."
Dawn said due to the supply shortage, the prices of 1,500cc cars will rise by about Tk 1 lakh and 2,000cc by Tk 2.5 lakh. The prices of jeep will increase by Tk 5 lakh to Tk 6 lakh, he added.
Before the earthquake, Japan was making 37,000 cars and trucks each day. It exported more than half of them. Fourteen percent of the 7.2 crore vehicles produced worldwide last year were made in Japan.
Most of the Japanese carmakers are based in south of Tokyo, which was able to evade the calamity. However, damage to the overall infrastructure in the country could cause a more lasting impact, importers said.
Dawn, also a former president of Barvida, said the roads have also been damaged disrupting carting the cars to the auction venue. A ship, which was due to leave Japan three days ago with cars, could not sail yet.
In Japan, there were nearly 7,200 confirmed deaths so far, and nearly 11,000 people remained missing. The government said it expects the death toll to exceed 10,000.
