Leading global brands like Nissan, Chevrolet and Honda say that their sales have gone down to half of what they used to be just six months back. [break]
"There is more than 50 percent decline in sales of private vehicles from Nissan, whereas sales of commercial vehicles have plummeted nearly 90 percent," said Shambhu Subedi, senior manager of Nissan Vehicles, Dugar Brothers & Sons.
The single reason for the decline, all of them say, is the wedging of auto loans that have come down to almost nil, as the credit exposure of most established banks has already crossed the limit set recently by Nepal Rastra Bank.
Not that all banks have stopped lending. Some banks with comparatively comfortable portfolios are still lending but the rates have gone up to 16 percent from around 7 to 8 percent just a year back.
This is natural when banks are compelled to pay 12 percent for fresh one-year deposits, says Rajan Singh Bandari, CEO of Citizen bank, adding, "Sixteen percent interest becomes normal when you add 4 percent cost of funds," he said.
"The scarcity of financing is making a huge difference in the sales of Daihatsu cars," said Akash Golchha, director of Golchha Organization.
Local market leader Hyundai is also feeling the heat.
"Sales of Hyundai cars have gone down 35 to 40 percent but we don´t see much difference in sales for high-end vehicles," said Rupesh Sharma Bhatta, senior manager for Business Development and Planning at Laxmi Intercontinental Pvt Ltd, the official partner for Hyundai. Hyundai is selling the popular hatchbacks i10 and i20.
There are similar jitters at almost all other dealers. Rabindra Raut, general manager for sales and after sales at Vijay Motors, authorized dealer for Chevrolet cars, said, "Expensive cars from Chevrolet are not affected much but sales of the smaller ones that dominate sales volume have decreased by almost 50 to 60 percent."
Ananda Raj Gurung, marketing manager of Honda Car Showroom, Syakar Company Ltd, speaks of similar pain but declines to give figures.
The impact of weak sales is also reflected in vehicle registration data. "Nearly 70 percent fewer vehicles are being registered since the banks tightened the flow of auto loans," said Anil Kumar Gurung, director of the Department of Transport Management.
The Department issued the order on replacement of Safa Tempos (three wheelers) with faster means of transport in October. Approximately 500 three wheelers in Kathmandu were to be replaced.
"If financing by the banks was as before, all three-wheelers would have been replaced by now but only about 50 of them have been replaced to date," added Gurung.
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