KHATMANDU: The sight is unusual. Hundreds of brand new cars from Maruti Altos to Hyundai Cretas all imported from India are gathering dust at the Birgunj Customs yard in Nepal.
A central bank-imposed credit squeeze has not just hit the auto sector but killed the golden goose for the government, which was raking it in with levies running as high as 240 per cent. Thus, an i10, which costs 4.5 lakh in India, will set you back 16 lakh in the Nepalese currency.
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Despite the stiff taxes, cars were big sellers, thanks to the bank-financed boom in the last two years. In 2015-16 (the Nepalese financial year starts from July 15), even when trade was impacted for nearly five months due to the Madhesi agitation, four-wheeler sales doubled to nearly 28,000. Motorcycle sales grew even faster.
All that is history now, with the Nepalese central bank Nepal Rashtra Bank clamping down on the aggressive credit financing by the banking sector. It has been especially harsh on auto loans, raising the margin money requirement to 50 per cent from 10-20 per cent.
The result: Car sales have been in a free fall the last two-three months. Ergo, importers are delaying lifting stock from the Customs yard.
According to a February 27 report in Ekantipur, a top Nepalese media, more than 3,000 cars were gathering dust at the Birgunj land border next to Raxaul (in Bihar). Umed Jain, an auto parts dealer in Kathmandu, says it’s the same on the Bhairawa land border (with UP), barely 150 km from Varanasi.
