When will auto imports begin?

Automobile traders have claimed that they are not in a position to import automobiles though the government allowed imports to resume.

Taking part in Nepalkhabar Roundtable on problems facing the auto industry and potential solutions held in Kathmandu on Sunday, auto traders said the environment was still not conducive for selling vehicles.

President of NADA Automobile Association of Nepal Dhurba Thapa said the industry was not vibrant despite the lifting of auto imports ban.

“Has the policy of banning auto imports succeeded? Has the policy improved foreign currency reserve?” said NADA President Thapa, adding ,“Last year, auto imports were of mere Rs 17 billion. The same would have been around Rs 14 to 15 billion, had the economy shrunk. What amount of foreign currency reserves did it save? Nevertheless, it has affected the revenue.”

The NADA president added though trading of commercial vehicles resumed after April, there has not been a favorable market for sales.

“During the time period of seven to eight months, about 2,200 to 2,400 vehicles were stuck in the customs. The Department of Customs has been urging us to take the vehicles to meet the revenue target. How can we release the vehicles since there is no favorable business environment,” Thapa remarked.

Seeking the government’s help in creating favorable environment for auto sales, Thapa pointed out that as soon as the Central Bank revises some policies, auto sales can be viable.

NADA President claimed the government cornered the auto industry every time though Rs 29 billion worth of fruits, Rs 39 billion worth of oil and ghee were imported to the country, which is said to have agriculture-based economy.

“The government only targets the auto industry. Mostly, it is said foreign currency exited the country and the auto industry reaps profits,” said Managing Director of CG Motocorp Karan Chaudhary. “But where is the environment for sales to make profit?”

The government had banned the import of automobiles, categorizing them as luxurious goods in April. The ban has been lifted since December 11. But, though import of cars resumed after eight months, traders are not ready to open Letter of Credit in banks.

General Manager of Laxmi Intercontinental, the official distributor of Hyundai Motors, Dipak Thapliya
said that the problem will be solved if the attitude towards vehicles is changed.

“How can we look at the auto industry? A car seems to be an luxurious item but has anyone analyzed its productivity?” Thapaliya questioned. “How do we perceive the necessity and importance of autos? How do we evaluate the development of auto industry? Should we always consider them as luxurious items?”

Thapaliya added a lot of problems would get solved once the government stops categorizing it as luxury goods.

Businessmen, participating in Nepalkhabar Roundtable, said the Nepal Rastra Bank (NRB) should reduce interest rates as well besides scrapping the provision of cash margin to facilitate auto traders to import vehicles.

NRB Executive Director Dr. Prakash Shrestha said the provision of cash margin would be revised with the improving economic situation. Citing timely fluctuation of interest rate, he said that the interest rate would go down in the next two to three months.

In relation to interest rate, Nabil Bank Deputy Chief Executive Officer Manoj Gyawali said, “Interest depends on supply and demand. This is why gold is expensive, silver is cheap and iron is cheaper.”

Remarking that as the supply gradually strengthens, the interest rates will gradually come down, Gyawali claimed the interest rate would decrease from January 15.