Sales of automobiles, which have remained resilient throughout the pandemic, have seen a significant increase in the lead-up to the festival season, with industry sources optimistic that sales would return to pre-Covid-19 levels by next year.
Traders claim that despite a price increase in two-wheelers as a result of higher taxes, the sector experienced a 50 percent increase in sales when compared to the same period previous year.
Because of a lack of semiconductor chips, four-wheeler dealers are experiencing a shortfall of inventory at a time when demand is increasing. Supply constraints on everything from automobiles to headphones have been exacerbated by a shortage of semiconductors, which has sent shockwaves across the global economy.
As reported by Reuters, a scarcity of chips has revealed the modern world’s dependency on these minuscule components, which serve as the fundamental building blocks of computers and enable electronic gadgets to process information.
While electronic products manufacturers reopened their operations, they continued to place orders, resulting in a growing backlog for the chips, which can be as little as a fraction of a millimetre in length.
According to Krishna Prasad Dulal, president of the Nepal Automobile Dealers’ Association, demand has increased, but there isn’t enough supply to meet the need yet. “During the festival period, there will be an even greater demand for vehicles.”
As a result of a scarcity of four-wheelers and the tax exemption available to electric vehicles, potential consumers are becoming more interested in battery-powered automobiles, according to Dulal.
Global semiconductor chip producers are experiencing serious supply chain bottlenecks caused by the Covid-19, which is occurring at a time when demand is high. Global chip shortages are expected to become less severe in the second half of 2022, according to reports in the worldwide media.
Before the festival, automobile retailers are experiencing a lack of four-wheelers, which is causing demand to surge. Sellers stated that they were accepting reservations and delivering the autos as soon as their inventory became available.
Prajwal Maharjan, marketing manager of Pooja International, the authorised distributor of Volkswagen four-wheelers in Nepal, stated that demand for four-wheelers was on the rise, but that they were experiencing difficulties delivering cars on time due to a lack of supply caused by a chip shortage.
“Higher prices resulting from an increase in metal costs and a lack of semiconductor chips have had no effect on buyer zeal,” Maharjan stated. In his opinion, four-wheeler purchasers are not price concerned, and increased expenses do not have a significant impact on their purchases.
Automobile dealers said that the cost of four-wheelers had climbed by 10% and the prices of two-wheelers had increased by 10% to 20% since the outbreak of the epidemic.
Following current trends, Maharjan estimates that 40 percent of clients prefer sports utility vehicles (SUVs) because of their off-road capabilities, according to the company. In addition, some customers are interested in entry-level hatchbacks, although the market for sedans is slow right now.
In some ways, said Subhash Acharya, vice-president of the association, “we are seeing the impact of the tax increase in sales.” “Even though costs have grown and there is a scarcity of four-wheelers, there has been an increase in demand for vehicles in the market, and people are purchasing them.”
The minister said, “Because people tend to purchase products following Sorha Sarad—the season when rites are performed to honour one’s ancestors—demand is expected to climb even higher.”
After the pandemic, Nijen Lal Shrestha, business development manager at Syakar Trading, the authorised distributor of Honda motorcycles and scooters in Nepal, stated that the market’s demand for two-wheelers had been steadily increasing in recent years.
According to vehicle dealers, the increase in taxes and the rise in metal prices in India have resulted in an increase in the price of motorcycles across the board. The price increase has had an impact on consumers who are purchasing vehicles out of necessity rather than luxury; nonetheless, because people are purchasing vehicles out of compulsion, the increase has had little effect on the market.
According to Shrestha, the demand for Honda scooters surged so high following the initial lockdown last year that the firm had a shortage of supplies as a result of the company’s slower manufacturing in India. Motorcycles and scooters in the medium range, including as the Dio and Honda Shine, are currently on the market; however, buyers wanting for higher-end motorcycles, such as the XR, will have to wait as booking has been opened for these models.
NADA Auto Show, Nepal’s largest auto show, has been postponed for two years as a result of the impact of Cyclone Covid-19. The event will take place in mid-February of next year, with a focus on New Year’s sales, according to the organiser.
Acharya asserted that auto shows have been effective in influencing consumer purchasing behaviour and increasing overall sales volume.
According to two-wheeler merchants, the car show has done nothing to entice customers to purchase bikes and scooters.
The Nepali New Year, as well as Dashain and Tihar, are the primary seasons during which automotive sales increase by 60-65 percent, primarily as a result of the enticing schemes and discounts offered by dealers.
The government increased the excise duty and road construction levy on two-wheelers as part of the revised budget for fiscal year 2021-22, which was passed in December. Depending on the engine size, the price has increased from Rs15,000 to Rs50,000.
While economic activity has slowed as a result of the lockdown, two-wheeler sales have seen a significant increase when compared to four-wheeler sales since the lockdown was lifted last year, as people have opted for private transportation due to the fear of contracting Covid-19 while using public transportation vehicles.
Imports of transport vehicles and parts valued at Rs10.14 billion were made in Nepal in the first month of the new fiscal year 2021-22, representing a significant 123.8 percent increase year on year. Imports of vehicles totaled Rs4.53 billion in the first month of the previous fiscal year, according to data from the Trade and Export Promotion Centre’s database.
A total of Rs97.37 billion worth of vehicles were imported into the country during the last fiscal year 2020-21.