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It’s been quite a year for the Nepalese motoring fraternity. After two years in a pandemic, it seemed like the automobile industry would finally get off to a flying start. However, it didn’t.
The import ban and the impending economic crisis took the automotive industry on a downward spiral throughout 2022. While import restrictions have been lifted, it provides little respite since the interest rates remain shelved at a very high point. Add to it the overall liquidity crunch, and it is clear to see that it has put a screeching halt to any and all progress. Nevertheless, we take a look back at all that has happened in the automotive industry of Nepal in 2022.
The biggest headline
The biggest headline that dominated the Nepalese motoring landscape in 2022 was the ban on the import of private cars and two-wheelers above 150cc. The ban which was imposed in late April was repeatedly extended citing depleting foreign currency reserves. From auto dealers announcing temporary layoffs to them coming out on the streets, the import ban deepened the crisis in the auto sector. Although the ban was lifted after a period of eight months, the policies implemented by the central bank still remain a major roadblock for the already crippled automobile industry.
Automobile Dealers Hit the Streets Demanding Policy Changes
Automobile dealers across the country took to the streets, demanding that the government roll back the unfavourable policies in matters related to automobile businesses. As part of a movement organised by the NADA Automobiles Association of Nepal (NADA), the umbrella organization of automobile dealers in Nepal, automobile businessmen have been protesting across the country against unfriendly policies that are currently in place.
Demands like providing concessions on the interest on the loan of the automobile business, adjustment of risk burden in auto loans, removal of cash margin system while issuing the letter of credit, adjustment in the working capital loan guidelines, and control of high premium rate imposed by banks, are yet to be addressed.
Nepal's automobile sector contributes nearly 21 percent to the government's revenue, providing employment to one lakh people directly and nearly ten lakh people indirectly. Similarly, this sector has been contributing 40 percent to Nepal's advertising market and 50 percent to the total revenue of the non-life insurance sector.
Of Electric Vehicles and the Shift in Consumers' Preferences
2022 was definitely the year of the EVs. With the import ban disrupting the market dynamics, it was the arrival of new EVs that saved the auto industry from receiving a near-fatal body blow.
On the front of the new arrivals, NETA, an EV brand owned by Hozon Auto, stole all the limelight (more on this below). Joining the suit of new launches was Henrey Automobile with its Mincar electric city car and Wuling with the Air EV. Similarly, on the electric two-wheelers front, Segway-Ninebot made its debut while the much-hyped Ola Electric revealed its products for the Nepalese market.
A Beacon of Hope
Although the import ban caused severe disruptions in 2022, there were a handful of new launches which came as a beacon of hope in these turbulent times.
The vehicles that made it to the showroom this year were the Kia Sorento Hybrid, Jeep Gladiator, JAC T8 Double-cab pickup truck, Nissan Navara Pro-4X, Suzuki Celerio,Hyundai Ioniq 5, Changan Hunter pickup, New MG ZS EV, Tata Tigor EV, Tata Nexon EV Prime, Proton X50, Force Gurkha, Hero Xpulse 200 4V,Yamaha R15M/V4 and FZ-X, Jawa 42 Sports Stripe, NETA V, Tiggo 8 Pro, New TVS Apache RTR 160 4v RTFi,Tiggo 7 Pro, GWM Wingle 5, Suzuki Avenis, Foton Tunland E+, Henrey Mincar, Pulsar NS 125, All-new Ford Ranger and Ranger Raptor pickup trucks,Wuling Air EV, TVS Ntorq Race XP, BYD Atto 3, and Pulsar N250/ N160, among others.
On the electric two-wheelers segment, NIU and Segway were at the forefront with their offerings. NIU introduced its Gova G5, UQIGT and MQIGT Electric Scooters. Similarly, Segway launched the E125, E110L and E100 electric scooters. The electric two-wheelers market also saw the introduction of new brands like Horwin, Aima, Raft, Komaki, Bravo, Joy-E, and Okaya EV, etc.
For the First Time in the Country, There was an Expo on EVs
The NADA Auto Show was back in business after three years, albeit in a slightly different avatar as a result of the import ban. NADA Automobiles Association of Nepal (NADA organized the first-ever EV Expo in Nepal, an exclusive exhibition on electric vehicles, components and ancillary.
The NADA EV Expo 2022 hosted the participation of seven 4-wheeler brands, one 3-wheeler brand, sixteen 2-wheeler brands, three brands of tyres, two brands of battery, nine companies of garage equipment, components and Nepal Drives media along with four financial institutions.
The inaugural edition of the EV Expo saw a footfall of more than 30,000 EV enthusiasts and visitors. Similarly, more than 250 units of various EVs were also booked during the four-day event which was held between September 22-25 at the capital's Bhrikutimandap Exhibition Centre.
The first-ever EV Expo was also fruitful for several companies as more than 250 units of EVs were booked during the exhibition. Tata's Nexon EV and Tigor EV garnered the maximum number of bookings followed by NETA, Hyundai and BYD.
Budget 2079/80. Quite a Blow
With the objective of giving high priority to industry establishment and production as the main means of import substitution, the government announced to levy only 1 percent customs duty on spare parts or raw materials for the manufacture of electric rickshaws, motorcycles and scooters.
Similarly, it also announced to provide incentives for companies looking to establish an electric four-wheeler industry in the country like a 40 percent income tax exemption for electric car assembling industries on their earnings for five years, and a waiver of 50 percent on the excise duty and 25 percent on customs duty for companies looking to assemble combustion engine cars.
However, it slapped additional excise and customs duties on electric vehicles with more than 100 kW capacity and for motorcycles above 200cc leading to a massive price increment on EVs above 100 kW. Not only that but the government also announced to increase the excise duty on cars above 1500cc by 5 percent.
Power Player
When CG Motors (a subsidiary of Chaudhary Group - the multinational Nepalese business conglomerate), announced its entry into the Nepalese electric vehicle segment with the launch of the ‘Neta V’ subcompact electric crossover, it rode a wave of hype only to be smothered by the very same heightened expectations it created.
Subsequent to the launch of the Neta V, the company received a lot of attention along with stark criticism regarding the pricing of the vehicle. However, the concerns regarding Neta V being priced much higher than in China were well-refuted by the official distributor company along with Hozon Auto, the car manufacturer, with strongly presented facts and figures.
Amidst the flurry of complaints and controversies, the electric crossover’s bookings crossed more than a hundred units in just under a month. Fast-forward to now, the Neta V has already become a worthy contender in the electric sub-compact segment.
Fuel Prices Reach a Record High
The import ban wasn’t the only thing that grabbed the headlines in 2022. By mid-June, the prices of petrol and diesel reached Rs 199 and Rs 192 per litre respectively, a first in the history of this country.
Although there have been numerous dialogues and policy recommendations to move towards renewable energies, petroleum is still the second-largest energy fuel in the country. At the time of writing this article, the fuel prices are Rs 178 per litre (Petrol) and Rs 175 per litre (Diesel) respectively.
The Rise of Public Charging Stations
In order to promote the use of electric vehicles and increase the efficiency of the energy sector, Nepal Electricity Authority (NEA) kickstarted a campaign to establish fast vehicle charging stations in major cities and highways of the country. The EV charging stations which are already operational in Ratnapark (Kathmandu) and Bharatpur (Chitwan) are gradually being established in other parts of the country as well.
Every charging station being constructed by the authority will be equipped with a 142 kW charger, a 50 kVA transformer for power supply, and an online charging system. Fast charging 60/60 KW DC and 22 KW AC chargers will be placed at the charging stations depending upon the location. Similarly, NEA has also developed the necessary NSP (National Service Provider) system has been developed to make online bookings. The authority's mobile app can be used for payment of the charge amount.
