SUV sales hit all-time high, over 10,000 units in 2022

People in Bangladesh are opting for cars that are higher, bigger and run stable on the roughest of roads, driving up the demand for sport utility vehicles (SUVs). 

Growing ten times in a decade, sales of sport utility vehicles (SUV) and their follower segment crossovers crossed 10,000 units for the first time in 2022, up by one-fourth in a year, according to the vehicle registration data of the Bangladesh Road Transport Authority (BRTA).

Infographic: TBS

Despite threats of a slowdown and times of austerity, the big cars helped the car market recover to a five-year high following the 2020 rock bottom. 

On the other hand, demand for sedans inched up to merely 16,700 units in 2022, still below the pre-pandemic level. 

In the last year, nearly four in every ten cars sold were SUVs or crossovers, up from just one a decade ago. 

Right now, two of every ten cars on the roads are SUVs or their lookalike crossovers, which have SUV bodies on sedan chassis. 

Almost all local and global companies have their outlets displaying a wide range of SUVs in the capital, while reconditioned car dealers are selling even more SUVs and hybrid crossovers. 

Changing preferences, market dynamics 

Car marketers said business people, politicians, professionals and top executives who need to travel outside Dhaka frequently are choosing SUVs due to the smoother ride and better control on even rough roads across the country. 

The SUVs have also emerged as a status symbol, with many upper-middle class families finding it better to buy an entry-level SUV or sub-2000 cc crossover at a Tk30-65 lakh range instead of a popular sedan like Toyota Allion or Premio at the Tk25-45 lakh range. 

The market offers them a wide range of options as almost all the big brands having emerging market aspirations are present here. In contrast, the reconditioned car market offers even more models, especially by Japanese brands. 

Mostafizur Rashid Bhuiyan, executive director of Rancon British Motors, which sells MG SUVs, said when sedan prices surpassed the long-seen ranges this year, SUVs and crossovers attracted more buyers. 

Car prices rose by 15-25% in a year and more than one-third in the last two years. 

In 2021, the price hike was due to global supply chain disruption and surging freight. After the Ukraine war, the soaring dollar hit the buyers even more. 

For instance, reconditioned Toyota Premio sedans are selling at around Tk45 lakh, which was available at approximately 33 lakhs in mid-2021. 

Rakib Hasan, a 38-year-old businessman in the capital, was planning for his first car, a reconditioned Toyota Allion, at a price of around Tk25-26 lakh since mid-2021. 

In a year, its price crossed Tk30 lakh, and with the forecasts for further appreciation of the dollar, he bought a Toyota CHR 1.5 litre hybrid crossover at Tk32 lakh from the same showroom of reconditioned cars. 

"If the dollar rises further, cars might become even more expensive. And, I was not ready to wait more for the hybrid vehicle that offers fuel economy," he said. 

The big boost came from hybrid crossovers as their prices increased less due to the lower duty, according to Abdul Haque, former president of Bangladesh Reconditioned Vehicle Importers and Dealers Association (Barvida). 

Not that SUV and crossover prices did not increase in line with the industry factors. 

Local car assembler Bangla Cars, which uses Indonesia-made DFSK body, chassis with Isuzu collaboration engines for its 1.5 litre SUV Glory I Auto, had to increase the unit price to over Tk38 lakh from Tk29 lakh in 2021 to adjust its costs due to the soaring dollar. 

Still, its sales doubled in 2022 and for more affordability, the company launched another entry-level SUV at Tk30 lakh in the New Year. 

Bangla Car Managing Director Zakir Hossain said the government barely procured new cars in 2022, corporate sales dropped, but families bought more.  

Arman Rashid, general manager and head of the supply chain at DSH Motors, the sole distributor of Honda cars, also said the government hardly bought any vehicles in the first half of the year, stopping purchases entirely in the second half.

Senior government officials— both in defense and civil administration— helped offset the sales loss this year as they bought their family cars with the help of a concessional car loan from the government. 

Around 800 Honda CRV SUVs were imported to the country in 2022, including those by reconditioned market players, up from 500 in 2021. 

Zakir Hossain observed that car sales had a slow growth till September and in the last two months of the year, many people pulled out their savings from banks to buy their car of choice. 

Luxury cars by European brands BMW, Mercedes-Benz, and Audi also sold more in 2022 —15-20% more than their average annual sales – as the wealthy people triggered their purchase decision out of the fear of further depreciation of the local currency.  

Macroeconomic turbulence defied 

In a year of high inflation and macroeconomic anxiety, marketers said car buyers defied soaring prices. 

It helped boost importers', assemblers' and marketers' confidence to keep importing more cars, even without the support of banks, as opening letters of credit (LC) for car importing became difficult amid a dollar crunch in the second half of 2022. 

Credit facilities for cars also stopped as they were chalked off as non-essentials.

"In 2022, we will see an upside down market picture. All the stocks were cleared and the market, instead, is at a risk of a supply shortage if importing is not made easy," said Abdul Haque. 

Like him, incumbent Barvida President Habib Ullah Dawn is not surprised to see the increased demand. 

He said that the Bangladesh car market has long been left behind compared to the ongoing economic development here. 

Affluent and middle-class families find their cars the best solution for mobility because of the insufficiency and inconveniences of public transport, said Haque, adding that the trend of growing demand would only continue. 

The government should come out of its punitive duty structure on cars for affordability. This would help the market grow in line with the economy and attract investments in local automobile manufacturing.