The future of Nepal’s used-car market

How will Covid-19 shape the used-car market? Will the second-hand cars capture a larger market share in the post-covid-19 era? And what role should the government play? To get answers to these questions, we reached out to a few industry experts.

Shailendra Shrestha

Kathmandu Automobiles

Due to the government’s high taxes, the Nepali automotive sector has always fallen in the premium-price bracket. Moreover, with an expected slowdown in the economy, public expenditure is expected to go down too. This will lead to lower sales and a general stagnation, or a slowdown, in the circular flow of income.

Beyond our borders, automobile sales have gone up due to a greater inclination to use private vehicle compared to public transport. The questions regarding sanitation and social distancing in public transport can be avoided through the use of a private vehicle. Hence in terms of overall public safety, the usage of private vehicles is recommended abroad. This makes private vehicles a necessity, rather than a luxury.

With this in mind, all financial institutions should look at used car financing. While some banks still finance second-hand cars, a supportive policy from the central bank will help all concerned.

While times are uncertain, we, at Kathmandu Automobiles, will continue to provide reliable and trustworthy service. Once the lockdown is lifted, we will do our best to maintain a healthy and sanitary work environment, for our customers and our employees. For now, you can reach out us on Facebook.

Rakesh Khadgi
Baba Basera Auto Group

Safety concerns over public transport, as well as social distancing and hygiene have become the talk of the town. I think people will increasing prioritize these things. In my view, the demand for a cheaper used car will go up. The second-hand car market will capture some portion of the budgeted new car segment. However, the used-car market is unlikely to capture a large market share.

A recession could bring a complete halt to economic activities. This will greatly affect the sales of both old and new vehicles. At the end of the day, automobiles, whether old or new, are still a luxury for many of us because of the exorbitant taxes.

Ambar Khadka

Lucky Autolink

I don’t think the market is going to recover anytime soon, especially the automobiles sector, whether it’s for new or used cars. It is going to take time for the consumers to feel confident. In fact, as coronavirus precautions restrict people to their homes, with travel recommended only for essential works, it is hard for us to be optimistic.

The government should lend a helping hand during this difficult period. Also, financial institutions have a bigger role. By instructing them to decrease interest rates, the government can ease our pressure to an extent.

Sundeesh Bhuju

Real Car Centre

The Covid-19 outbreak has definitely contributed to a difficult market condition. This is destined to continue even in the post-covid-19 scenario. 

Talking about the used-car market, I think the demand will be slow for the first few months. The demand for vehicles in the low price bracket (below 15-20 lakhs) will not be as affected as the demand for higher- bracket cars (40-50 lakhs above). In the lower range, customers usually tend to pay the entire amount up front without any assistance of financial institutions, whereas in the upper range, they usually finance their vehicles.

The good thing about this chaos is that people have started understanding the importance of savings. They will minimize their spending and cut down on unnecessary needs. In my view, they will put off getting a new car and the financial commitments that comes with it for a while, knowing that the depreciation for a first-hand vehicle will be astronomical.