Private passenger car sales in Bangladesh have declined to the lowest level in 13 years, reflecting economic headwinds, high import costs and tightening consumer purchasing power, according to market insiders and official data.

Industry insiders stated that the latest figures represent the lowest annual registration level since 2011, making 2025 the weakest year in 13 years and indicating a decline in car sales.

The decline indicates a downturn in a market that had grown steadily before the pandemic. Insiders attribute the situation to weak business conditions, higher vehicle prices resulting from dollar appreciation, increased import duties and rising living costs.

Mohammed Shahidul Islam, chairman of HNS Group, stated that a combination of economic stress and political uncertainty has contributed to a decline in vehicle sales.

"The overall business environment in the country has been affected," he said. "Last year, the law-and-order situation was weak, and supply chains were disrupted. Our own supply chain was also affected."

He further added that the money market was severely squeezed. "There was fear and uncertainty. Liquidity tightened, and people became cautious about spending," he said.

According to Bangladesh Bank data, consumer lending rates rose to between 12 and 15% in 2025, up from 8 to 9% in 2022.

Rising borrowing costs further reduced demand. "Loan interest rates increased, and the cost of funds went up significantly," Islam, also the former secretary general of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA), said, adding that higher financing costs discouraged consumers from taking car loans.

At the same time, vehicle prices increased due to currency depreciation. "The dollar appreciated sharply - at one point by nearly 40%," he said, citing the example of entry-level models.

According to Islam, political instability, street protests and business disruptions also reduced consumer confidence. "When there is uncertainty and businesses face harassment, people postpone major purchases," he said.

"All these factors combined have led to the drop in sales," he further added.

Reaz Rahman, managing director of Reaz Motors, stated that vehicle sales last year were the lowest in 13 years and described the market as slow.

He attributed the downturn to rising costs, political uncertainty and tight banking conditions. Although car prices had already increased two to three years earlier, further depreciation of the taka against the US dollar has pushed costs up by around 30% over the past two years.

"As the dollar rate increased by over 30%, import costs automatically went up. Duties also rose accordingly," he said, adding that many vehicles have moved beyond the purchasing power of middle-income buyers.

Rahman, the current secretary general of BARVIDA, stated that instability in the political and banking sectors over the past two years reduced consumer confidence. The prolonged interim government tenure also affected business sentiment.

He also highlighted supply constraints in Japan, the main source of reconditioned cars. Bangladesh allows imports of vehicles up to five years old, but production disruptions during the Covid-19 pandemic in 2021 and 2022 have made eligible models scarce and expensive.

"When we bid for those cars, prices are very high," he said.

Rahman urged the government to allow imports of vehicles up to seven or eight years old in order to ease supply, lower prices and increase revenue. Arif Khan Bipu, managing director of Motors Bay, stated that financial hardship and weak business sentiment are the main reasons behind the slowdown in vehicle sales.

"In my view, people are reluctant to spend large amounts of cash," he said. Buying a car worth BDT 40 lakh to BDT 60 lakh ties up significant funds, while taking a loan creates repayment pressure. "When business is slow, customers worry about how they will service instalments. This financial strain is a key factor."

He stated that the broader economic slowdown has affected all sectors, including the automobile sector. Under a temporary government arrangement, large-scale investments and liquidity flows tend to weaken, discouraging major purchases.

The depreciation of the taka against the US dollar has increased the cost of completely built units (CBUs), making new vehicles more expensive for middle- and upper-middle-class consumers, he further added.

Although there has been a shift in market share with the rise of Chinese and electric brands, Bipu stated that official data indicates that overall vehicle purchases have declined.