In its bid to discourage big-ticket non-essential imports, the government has slapped more supplementary duties (SD) on all types of cars having over 2000 cubic centimetre (CC) engines.
The added SDs alone would cause a double digit price hike of popular cars such as Toyota Highlander, Harrier, Land Cruiser Prado, said Abdul Haque, immediate past president of the Bangladesh Reconditioned Vehicle Importers and Dealers Association (Barvida).
Barvida Secretary General Mohammed Shahidul Islam said in conjunction with the already prevailing cost enhancers like soaring import value, currency devaluation, over 2000 cc passenger vehicles are set to see a one-fourth to one-third price hike in 2022.
The government raised the SD on all sorts of passenger cars including sports utility vehicles and station wagons having 2001-3000 cc gasoline engines to 250% from 200%, while the SD on 3000-4000 cc slab soared by 150 percentage points to 500%, and that for the over 4000 cc ones is unchanged at the previous punitive rate 500%.
"The government wants us all not to spend foreign currency too much in this very macroeconomic state, as it prioritises the forex reserves – that makes sense," said Abdul Haque, also the managing director of Haq's Bay, a leading car dealer in the country.
"But, I must say, not its entire automobile tariff was well thought out this time," he added.
Both the car market players are surprised to see the government's U-turn from its stance regarding hybrid cars and large microbuses.
The government in the previous year reduced duties on microbuses treating them public transport. Due to a price drop, microbuses sold well to replace old and dilapidated public vehicles on roads – fetching the government a higher revenue.
Now the duty on over 2000 cc microbuses again have been slapped back.
SDs on over 2000 cc hybrid cars also have been proposed to be raised in the budget which should have been the opposite, said the Barvida leaders.
A 2500 cc hybrid car burns fuel not more than what a 500 cc internal combustion engine car burns, said Haque, adding that incentivising hybrids would help the nation save fuel for years.
SD on 2001-2500 cc hybrid sedans, SUVs and station wagons raised to 60% from 45%, which soared to 100% from 60% for 2501-3000 cc hybrid cars, 150% from 100% for 3001%-4000%.
Hybrid microbuses having over 2000 cc engines will face 60% SD, up from 45%.
"We would request the government not to punish hybrid cars and microbuses," said Shahidul Islam who is the managing director of car dealership HNS Auto.
"The market is already on the verge of supply shortage due to soaring US Dollar, abnormally raised LC margins for car imports," he added.
Car assembling also has been discouraged unless the plants opt for more local value addition as SD on completely knocked down (CKD) cars having 2001-3000 cc engines raised to 150% from 100%, to 350% from 300% for 3001-4000 cc ones and to the duty redline of 500% SD from 350% for over 4000 cc cars.