Nepal’s auto boom: Story of share market, real estate uptick


File Photo of NADA Auto Show 2016. Photo: Shreedhar Poudel/OnlineKhabar

The automobile industry witnessed a staggering growth of 60 per cent in the last four months of the current fiscal compared to the same period last year, says Nepal Automobile Dealers’ Association of Nepal (NADA).

Last year the growth rate for the same period was 35 per cent.

Over the years, Nepal has proven to be a lucrative market for automobile dealerships. The increment in income of the urban middle class, thanks to the stock market and the real estate boom, and the availability of new entry-level hatchbacks in the market can be attributed for the growth, experts say. Banks’ campaigns to lure prospective auto buyers have also played a significant role.

No frills entry-level hatchbacks can now be bought for as low as Rs 1.4 million.

“The ease of process for acquiring auto loans has fueled the industry’s growth,” says NADA President Anjan Shrestha. “During the same time last year, Nepal’s economy had become stagnant with the blockade. New vehicles were stuck at the border and consumers were not eager to invest huge sums in new automobiles.”

This year, however, a general upward trend is also seen in consumer confidence after the blockade, and this has translated into more business for the automobile industry. “The rise is also due to the festival discounts provided by various brands during this year’s Dashain and Tihar,” says President Shrestha.

At 60 per cent, hatchbacks account for a major portion of the automobile industry in Nepal. Hyundai, Suzuki, Volkswagen, Honda, Kia, Ford and Datsun (brands popular in the segment) have all reported a surge in sales during the last four months. In the last four months alone Datsun, a new entrant in the market, has reported a sale of 1200 units in the last four months. Similarly, Maruti Suzuki sold a total of 2,000 units during the same period.

The Maruti Suzuki four-wheelers growth story is of 90 per cent as compared to last year, claims the company. Likewise, Volkswagen sold nearly 300 units during the past months whereas Ford sold a total of 550 units. Apart from these brands, almost all other brands have reported surges in sales as well as in advance bookings.

After hatchbacks, SUVs are most popular cars in Nepal. SUVs account for a total of 20 per cent of the local automobile industry, and their sales have also enjoyed a steady growth in the recent years.

Similarly, Indian carmaker Mahindra has also reported strong sales of 1,500 units. The brand is especially famous for its SUVs like KUV-100.

Then there are the cross-overs. They are also not doing bad. Recent entrant to the local market, French automobile maker Renault has reported the sale of 250 units and a strong bookings of 1,000 units. Launched at the NADA Auto Show 2016, Renault sells the SUV, Duster and Kwid, a crossover SUV/hatchback in the local market.

Industry experts however warn that as Nepal’s stock market shows signs of slowing down, and banks deal with a slump in liquidity, this bubble could be bursting sooner than expected.


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