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The vehicle industry in Nepal has experienced a speed bump just ahead of the festive season.


The vehicle industry in Nepal has experienced a speed bump just ahead of the festive season.

The government increased the excise duty and road construction charge on two-wheelers as part of the revised budget for the 2021-22, which has caused a snag in the country’s vehicle sector. In accordance with the engine capacity, prices will rise Rs15,000 to Rs50,000.

Due to the recent increase in excise duty and road construction charges, those who were planned to a two-wheeler during the approaching festive seasons of Dashain and Tihar would be impacted negatively. During time period, automobile dealers frequently tempting discounts and programmes, and price-conscious Nepali consumers advantage of these deals to get a new vehicle on the cheap. The sales of two-wheelers have increased by 60 to 65 percent, according to vehicle dealers, over this time period.

According to the revised budget, the government has increased the excise charge on two-wheelers with engines ranging from 125cc to 200cc by up to 50%. A 40 percent excise levy on two-wheelers with engines between 155cc and 250cc was previously levied by the government on those with engines within these capacities. The 125cc to 250cc class of two-wheelers accounts for the vast bulk of sales in the country today.

Similarly, the excise duty on motorcycles with engine capacities ranging from 500cc to 800cc has been raised to 100 percent, representing a 20 percent increase over the previous arrangement.

The government has also increased the fee for two-wheelers to use the roads during road construction. According to the new law, the road construction tax on motorcycles with displacements greater 125cc is Rs15,000 unit. Similarly, the road construction price on 125cc to 250cc motorcycles is Rs18,000, while the charge on 250cc to 400cc motorcycles is Rs50,000 per unit, and the tax on motorcycles with displacements greater than 400cc is Rs100,000.

Motorcycles with engine capacities between 155cc and 250cc cost Rs15,000 a unit, while motorbikes with engine capacities between 250cc and 400cc cost Rs50,000, and motorcycles with engine capacities greater than 400cc cost Rs100,000 per unit before the increase.

Although the government has increased the tax on two-wheelers, Krishna Prasad Dulal, president of the Nepal Automobile Dealers’ Association (NADA), stated the government has provided a 50 percent waiver on the parts used by the two-wheeler assembling industry, an increase from the previous 25 percent.

“The higher waiver will help domestic assemblers to cut their prices and become more competitive with imported bikes,” Dulal explained.

Dulal stated that this move by the government is a positive development and that it encourages other dealers to open assembly facilities in the country, which will contribute in the establishment of industry and the creation of new jobs.

According to dealers, the prices of domestically assembled bicycles will not rise, however the prices of

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