The market size for reconditioned cars is around Tk5,000 crore and each year the size of the market increases by 15% to 20%, market insiders said
The price of used cars may see a hike. The government has proposed to reduce the year-wise depreciation facility on the import of reconditioned cars in the upcoming national budget.
“In the 2017-18 budget, yearly depreciation benefits for reconditioned cars have been restructured. I propose a further 5% reduction of current yearly depreciation benefits in the 2018-19 budget,” finance minister AMA Muhith said on Thursday in parliament.
Currently, reconditioned car importers enjoy a depreciation facility, ranging from 15% to 40%, on the basis of the production year of the vehicles.
However, the government wants hybrid or electric cars to dominate the streets. It has proposed a supplementary duty reduction on the import of 1600 to 1800cc hybrid cars from the existing 45% to 20%.
The duty structure changes were made considering the need for energy-efficient and environment- friendly means of transportation.
Around 99% of reconditioned cars in Bangladesh are imported from Japan.
Currently, the market size for reconditioned cars is around Tk5,000 crore and each year the size of the market increases by 15% to 20%, market insiders said.
Currently, there is no depreciation for cars less than one year old—while there is a 15% depreciation for cars one to two years old; 25% for cars two to three yearsold; 35% for cars between three to four years old, and 40% for cars between four and five years of age.
However, with the latest announcement by the finance minister about the budget, on Thursday, the government has brought down the facility by 5% for each of the slabs.
Bangladesh customs law does not allow for the import of any used car that is above five years old.