Several auto dealers in Nepal have already announced temporary layoffs as the ongoing import ban deepens the crisis in the auto sector. The temporary layoff could be the first of several, as per insiders, who are struggling to cope with the impacts of the import ban.

“There’s no guarantee that the ban will open anytime soon, hence, there’s a strong chance that we will have to close some of our dealerships indefinitely”, said a dealer of a multinational brand speaking on the condition of anonymity. “At present, most of the layoffs that have happened are in front-end sales jobs, but if this continues, then even the technical jobs will be affected”, another industry source told Nepal Drives.

The ban on the import of private vehicles and motorcycles above 150cc has been extended time and again citing the depleting foreign exchange reserves and other contributing factors. NADA Automobiles Association of Nepal (NADA), the governing body of automobile dealers in Nepal, has been continuously requesting the government to ease the ban on the import of private vehicles and motorcycles.

“We are hoping the government is taking serious note of the crisis going on in the auto sector. Along with the people who are employed directly in the industry, workers in the related service sectors including dealers, workshop and spare parts owners, and mechanics, will also be jobless if the (import ban) continues”, said a senior company official of a multinational brand.

The ban on the import of motorcycles above 250cc and petrol/diesel cars was enforced from April 27, 2022. On top of that, the government added two-wheelers above 150cc to the import ban list from July 17, 2022.

Although the share of automobiles in the country’s growing trade and balance of payments deficit is very small, its revenue contribution is massive. According to data shared by the NADA Automobiles Association of Nepal (NADA), the import of private vehicles such as cars, jeeps and vans is less than 1 percent (Rs 17 billion only) of the country’s total imports. However, the contribution from this sector is almost more than double (Rs 39 billion). In a nutshell, the automobile sector of Nepal contributes nearly 25 percent to the country’s total tax revenue.

The government will review or try to amend the moratorium on December 15 depending on the foreign currency reserve position.