Used car market growing bigger in Bangladesh

People’s purchasing power is increasing and the communication infrastructure is being developed in the country. The demand for cars is going up as well.

Those who cannot afford to buy brand new or reconditioned cars at a high price, turn to the used cars within their budget. This has been a growing trend. The used car market of cars used inside the country or old cars is steadily growing.

People involved in the sector said that about 4,500 used cars are sold every month just in the capital. Alongside sedans, the demand of sports utility vehicle (SUV) is also seeing gradual growth.

Traders claim, though the market seems promising, there are quite a few problems too. For example, bank loans are not easily available in case of buying used cars.

Apart from that, there are high tax rate, inflation and newly imposed carbon tax alongside the long delay in switching the ownership. On top of that, the recent market condition has also had a negative impact on the market. The sales would have far better otherwise.

Used car traders’ association, Dhaka City Used Car Dealers Multipurpose Cooperative Association general secretary Bayezid Hossain told Prothom Alo, despite there being potential, the used car market isn’t growing at the desired rate because of the current economic condition, bonus tax rate and hassle at BRTA.

Basically, used cars business in the country is Dhaka-centric. According to the used car traders’ association data, there are 300 plus used car yards in Dhaka. Twenty of them are located in Banani area and here’s a high demand of SUVs and expensive sedan cars there.

Meanwhile, more than 30 yards are there to be found in Mohammadpur Beribadh and Dhanmondi areas. Budget-friendly cars are sold more in these areas. There are over 50 yards in Tejgaon, Kakrail and Monipuripara areas together.

Apart from them, there are many more used car yards in Banani’s Chairmanbari, Baridhara J-Block, Karwan Bazar, Sangsad Bhaban-adjacent Monipuripara, Shyamoli, Uttara’s Diyabari and other areas. Besides, there are 150 plus used car yards in a few areas close to Dhaka including Narayanganj.

Traders said that used cars are sold more or less throughout the year. But there’s a slight increase in sales on different occasions. For instance, many parents buy a car at the beginning of the year as they need it to drop their children off to schools. As a result, the sales of these cars see an upsurge in the three months between December and March.

While talking, used car traders’ association leaders said that each of the sale centres make monthly sales of 15 cars on average. Besides, many people also swap their cars. In that consideration, 80,000 to 100,000 cars are sold and swapped annually at the 450 yards in Dhaka and its adjacent areas.

Based on the model, years been in use and features, these cars cost minimum Tk 200,000 (2 lakh) to maximum Tk 25 million (2.5 crore). Usually, cars priced between Tk 800,000 to 2.5 million (25 lakh) are more in demand. The used car traders’ association leaders believe that including all, country’s used car market would be the size of around 150 billion (15,000 crore).

Used car traders said that almost half of the sold cars are private cars, microbuses are 30 per cent and SUVs are about 20 per cent. Used cars are mostly bought by jobholders, small-medium business owners and middle class population.

When asked how these cars reach the market used car traders’ association general secretary Bayezid Hossain said, there are some mediators in every single area of Dhaka, who keep track of used car sales. They connect the traders with the car sellers. Many buyers and sellers directly contact the yards. Besides, used cars are traded on Facebook and YouTube-like online platforms too.

Md Maksudul Hasan host Facebook live shows, visiting different used car sales hubs. He said that customers from the comfort of their homes get a detailed idea of the price and condition of the cars online. This saves them time and money. After getting the detailed idea online, they buy cars directly from the centres.

Traders say basically the middle class, especially those who cannot afford to buy brand new and reconditioned cars or want to save up money, are the customers of used cars. Business partner at Karwan Bazar’s JB Autos, Al Zabir Chowdhury said that these car cost Tk 1 to 1.5 million (10 to 15 lakh) less than brand new or reconditioned cars.

On the other hand, used car prices do not depreciate more than Tk 200,000 to 300,000 (2 to 3 lakh). That means many people also buy these cars for the resale value being better. Moreover, after using the car for a certain period it can be swapped with another model from the used car yards by spending a little bit of money.

Traders said that the used car market is being ruled by Japanese Toyota, Honda, Mitsubishi and Nissan- these four brands. Toyota among them is ahead of all. Toyota’s X Corolla, Allion, Premio, Probox, Rush, Avenza, Prius, Cynthia etc. models are quite popular also.

Used Car Banani Limited’s manager Md Ashraful Islam said that Toyota cars are high in supply and their parts are easily available too. So, their resell value is better. Though there are other budget-friendly cars, their resell value isn’t that good for the parts being difficult to find.

Traders also said that cars of different models from more than 22 global brands are now available in the country. Out of them, used cars of Toyota, Honda, Hyundai, Haval, Kia, Mazda, MG, DFSK, Glory, Proton, Chery brands are found at comparatively cheaper prices.

And among the expensive SUVs, customers are showing an increasing interest towards used cars of Mitsubishi Pajero, Nissan X-Trail and Juke, Toyota’s Prado, Harrier, Hyundai’s Tuckson, Land Rover, Audi, Mercedes Benz and BMW brands.

Traders said that the price of used cars has gone up by more than 15 per cent within the last year. Besides, the price of brand new and reconditioned cars entering the used car market has also risen up by Tk 300,000 to 500,000 (3 lakh to 5 lakh).

Manager of Madina Car Collections located in Mohammadpur Beribadh area, Nur Hasan said, "The type of used cars we used to buy at Tk 700,000 (7 lakh) are now selling at an increased price of Tk 850,000 (8 lakh). So, we are also compelled to sell them at a higher price." 

The government in the current, 2023-24 fiscal year has levied environment surcharge on several private cars. Traders claimed that this has started having a negative impact on the sales of used cars.

Besides the supply of cars in the used car market is declining as well for the price hike of imported reconditioned cars, they added.

Used car traders' association general secretary Bayezid Hossain said, the way government has been adding different taxes on cars it is going beyond the reach of the middle class.

Traders said that bank loans aren’t available for buying used cars. So, they as well as the customers have to buy it in cash. Another major issue is the long delay in changing the ownership of used cars. Because, Bangladesh Road Transport Authority (BRTA) takes way too long to complete all the procedures of switching ownership. Traders demand for this procedure to be made easier.

Owner of Momo Vehicle in Mohammadpur Beribadh area, Md Jahangir said, “Even if we go to BRTA within two to three days of selling a car with the car owner and the required papers for change of ownership, it takes up six months for all the procedures to be completed. So, we fail to keep our commitment to the customers.”