Are cars a luxury or necessity?

By Tshering

As modernization and economic developments are speeding in our country like never before, imports of vehicles are taking the same trend.
For instance, in 1980, there were only 700 vehicles but after five years, it shot to 3,980, indicating an increase of 468 percent. Today, there are 88,227 vehicles in the country and in the first six months of 2017 alone, 3,930 vehicles were imported.
While some buy for pride and status, for many it has become a necessity.
Rinzin, who joint the civil service recently said, getting to office on time is becoming very difficult and challenging. “I am travelling in city bus and taxi, but I always get late. The bus and taxi are always full and people have their own destination,” Rinzin said.
“I had applied for vehicle loan no matter the taxation or loan process,” he added.
Another civil servant Tshering Dorji said owning a car has many advantages. One doesn’t have to depend of others during emergencies and one can claim mileages if we take our own car on office tours.
Dhendup, a private employee said owing a car is necessary in the capital.
He also added that middle class families buy small family car to fulfill the needs of their family members and ease travelling issues. “Farmers buy utility vans for transporting their agriculture products, whereas rich buy to show their class, pride and status in the society,” he said.
Kencho Lhamo, a house wife said, “I can’t depend on my husband to drop kids to school every day as he works tirelessly, so I decided to buy another car to ease his work load.”
While many feels it has become a necessity, there are few though, who buy for pride and status.
Kinga Penjor, a resident in Olakha said he sold his old car to buy an upgraded new model car. He hopes that the latest model he brought will be in the market of next five years. “I will change it if it becomes out of fashion,” he added.
Kinley, a second hand car dealer in Olakha said usually he sells around two or three cars every week depending on customers demand.
“People still opt for new vehicles despite the new taxation and stricter lending conditions imposed by banks” he said.
Tshedup, a recent graduated from India said without a car, it’s difficult to get girlfriend in Thimphu. When you have a girlfriend a car is must in any case from dinner date to joy ride.
He also added the importance of car is only felt when you just get employed or started a new family or made new girlfriend in Thimphu.
As per the records with the Road Safety and Transport Authority (RSTA), there are 88,227 vehicles in the country. This means that 3,930 vehicles were bought in the first six months of 2017, indicating a purchase of 21 vehicles every day. Thimphu has the highest with 36,273 vehicles followed by Phuentsholing with 24,904 and Samdrupjongkhar with 4,085 vehicles.
This shows that the country bought about 24 new vehicles every day in 2016. Almost half of these vehicles imported are plying the streets of Thimphu.
Due to the import ban, between 2012 and 2013 only 477 vehicles were imported. After adopting the new taxation, the import ban was lifted on July 1, 2014. This resulted in increase of vehicles from 67,926 in 2013 to 69,602 in 2014. In the following year, number of vehicles increased by 5,588. This nearly doubled in 2016, when 9,107 new vehicles were bought within a year.
The government has already revised the sales tax and customs duty on import of vehicles and lifted the ban. The central bank on August 1 issued a circular to all financial institutions informing them about the loan to value ratio on motor vehicle or transport loan being revised from 50 percent to 30 percent with immediate effect. This means that financial institutions will only provide 30 percent of the vehicle cost as loan and the loan applicant will have to inject the remaining 70 percent as equity.
In 2016, import of vehicles amounted to Nu 6.94B outflow of INR. Bhutan trade statistics show that Nu 547M worth of vehicles were imported in 2013, which shot up to more than Nu 2B in 2014, of which Nu 1.6B were imported from India.