Kathmandu, March 19

Vehicle sales have dropped in the recent months as the banks and financial institutions have been tightening auto loans amid the ongoing credit crunch in the country's banking sector.

As more than 95 per cent of the vehicles are sold through financing, automobile dealers have said that clamping down on auto loans has put the entire auto industry at risk in recent months.

Moreover, the import of vehicles in the country has come down in the first half of the ongoing fiscal year, reflecting the impact of the current banking scenario in the automobile industry of the country.

As per the Department of Transport Management (DoTM), Nepal imported 201,747 units of vehicles in the first six months of 2017-18 against 208,454 units of vehicles imported during the same period in 2016-17.

Vehicle import seems to have fallen down especially in the recent months along with country's financial sector being oriented towards liquidity crunch. Though monthly vehicle import stood at an average of 44,000 units in between mid-August and mid-November last year, vehicle import came down to 29,854 in between mid-November to mid-December and was further reduced to 17,660 from mid-December to mid-January.

It is to be noted, however, that September and October are regarded as peak seasons for vehicles sales due to festivals like Dashain and Tihar, when customers usually go on a buying spree.

“Vehicle sales are completely down as the banks have really squeezed auto loans. And even if a bank is ready to offer the financing facility, interest rates on auto loans have been raised to almost 15 per cent,” said Anjan Shrestha, president of Nepal Automobile Dealers' Association (NADA), adding that automobile dealers are praying for the credit crunch situation to be addressed soon.