Though the import restrictions have been lifted, there is no environment in terms of doing business. There has not been any support from the government and departments concerned. The 50 percent margin in opening the letter of credit (LC) for importing vehicles is still in place. That means, we have to deposit millions of rupees in the bank for months without any interest. This should be lifted too.
There is no risk in automobile financing, yet the loan-to-value ratio has been set at 150 percent. Due to this, the banks hesitate in automobile financing. Also, the Nepal Rastra Bank has made it mandatory for financial institutions that they can only look up to 50 percent of the financing in private vehicles. This too should be lifted as it should rely on banks-customers relations and trust. Hence, our protests are still going on. What do the government and the central bank need to do to stop a further slump in the automobile market? As the automobile business has been severely impacted by the Covid-19 pandemic and the recession, the government should help us to flourish by lifting all restrictions and providing subsidies to auto businesses. I don’t think NADA has asked for anything impossible. We are flexible in bank interest rate as it is often determined by the market. Our demands are the need of the hour if the concerned authorities want to see this sector boom and help traders, sellers, and customers. As import restrictions have been lifted, how long would it take for the auto sector to return to its usual business cycle? Even if the government and the central bank immediately meet our demands, I think it will still take at least a year for normalcy to return to the automobile market. The economic slowdown and liquidity crisis coupled with the higher inflation rate and bank interest rate have hampered us a lot as the customers are not in a position to buy vehicles. What was the impact of the eight-month-long import restrictions on the automobile sector? Many traders and dealers have already left this sector after incurring huge financial losses and many are in the process to leave as soon which of course will lead to thousands of people becoming jobless. Automobile importers and dealers are not only facing the impacts. The government itself had lost a large source of revenue generation as the custom tariff on automobiles is around 250 to 300 percent. And I think, due to this reason too, the government had to lift the import ban. How much revenue did the government lose due to the import restrictions? In the last fiscal year, we spent around Rs 90bn on customs duties and other expenses. So, I think, the government lost at least Rs 40bn in this period. With the government lifting the import ban, when will authorized auto dealers start importing new vehicles? When will the consumers get the new models? By completing the process, in around two months, new and demanded models of vehicles will be available in the market. While the government stopped the import of internal combustion engine (ICE) vehicles, it allowed electric vehicle imports during this period. The government data also shows a huge surge in the imports of electric vehicles. What do you think will be the market for EVs in Nepal? Not only in Nepal, but globally, electric vehicles (EVs) are the future of automobiles. That doesn’t mean electricity will replace petroleum products immediately. But the process has already started. Nepal has a good and growing market for EVs. I see that we have not been able to meet the demands of customers. But this is a global problem due to the lower production rate. I guess that in the next five years, around 50 percent of the import of cars and two-wheelers will be EVs.
