KATHMANDU, July 8: The business of automobile, which dropped significantly after Nepal Rastra Bank (NRB) tightened provisions to issue bank loans for buying personal vehicles, is now expected to rise as the government has issued taxi permits to 1,500 earthquake-affected people.
Anjan Shrestha, president of Nepal Automobile Dealers Association (NADA), believes that the government's latest move would provide much-needed relief to the automobile sector which had been witnessing drop in sales since NRB tightened lending rates in February.
Earlier in mid-July, the Department of Transport Management (DoTM) conducted a lucky draw to issue taxi permit to 1,500 quake-hit people of 14 worst hit districts.
The department had received almost 150,000 applications from the quake victims.
Automobile business started to fall after the central bank tightened lending for purchase of personal vehicles. The new provision required banks to invest only up to 50 percent of the valuation of the motor vehicle. Previously, the BFIs used to invest as high as 80 percent of the valuation.
The decision made immediate impact in the automobile business. Registration of personal vehicles, which used to be around 2,000 units per month, fell to 1,786 and 1,307 in mid-January to mid-February and mid-February to mid-March, respectively, according to the Ministry of Physical Infrastructure and Transport.
As many as 3,000 personal vehicles were registered in the country between mid-October and mid-November.
"As it will be difficult for quake survivors to purchase taxi, automobile dealers have introduced attractive schemes on purchase of taxi," Shrestha told Republica.
However, the excitement seen in those, who got taxi permit, has been dampened by a decision taken by the newly-elected officials of the Kathmandu Metropolitan City (KMC).
Those planning to buy taxis are now confused as the KMC has decided to put a ban on operation of new taxis inside the Kathmandu Valley. The KMC has asked the quake victims to operate taxis in their home districts.
Nabaraj Kafle, a quake survivor from Ramechhap, said that the decision to put a ban on operation of new taxis inside Kathmandu Valley has put all those who got taxi permits in a big trouble. "There is no point in buying such expensive taxis if we are allowed to operate only in our villages. How can we earn profit in places where taxi is a luxury that only a handful of people can afford?" he wondered.
"If it is not possible to give route permit in Kathmandu Valley, the government should allow us to operate passenger SUV or buses in rural areas."
Different automobile companies have launched their passenger car as taxis. While Suzuki is offering Alto as taxi, Tata has pitched Indica model as taxis. Other automobile companies have also offered different models as taxis for quake survivors.
According to Rabin Shrestha of Sipradi Trading, Tata Indica is available at Rs 2.09 million.
"We will provide discount of Rs 50,000 if quake survivors buy taxi on their own, and Rs 100,000 if they taxi in partnership," he added.
According to DoTM, there are more than 8,000 taxis in Kathmandu Valley.