Showrooms, once a bustling scene of customers eager to explore and select the vehicles they desire, now spend most days idle, cleaning and preparing cars in the hope that a customer will walk in.

“When the phone stops ringing like before, you know things are slowing down,” said Arif Khan, general manager of Motors Bay, a showroom overlooking Hatirjheel in Tejgaon. Like him, almost all showroom owners are worried about sales falling to near zero.

The once booming luxury car market in Bangladesh is now in sharp decline. High-end car sales have been on a steep downward trend since mid-2024, greatly affected by political instability and economic difficulties.

In addition to economic and political barriers, social factors also influence spending on luxury goods; Many people are hesitant to display wealth at a time when sources of income are under increased scrutiny.

According to the Bangladesh Road Transport Authority (BRTA), private vehicle registrations have fallen by 36% compared to last year; this was a staggering decline even before the protests over quota reforms in July and August.

“What people don’t understand is that even those who can afford it are reluctant to spend due to social scrutiny.”

Arif Khan, Motors Bay General Manager

This decline was a shock for luxury car dealerships, which have long appealed to the elite. Cars, often seen as symbols of wealth and priced above Tk1 crore, now sit untouched in showrooms with sales coming to a near standstill.

Political uncertainty and economic pressure are keeping these high-end cars out of the reach of their usual buyers – wealthy businessmen and prominent figures who are suddenly becoming more cautious about high-priced purchases.

A market in decline

Bangladesh’s luxury car market has traditionally relied on wealthy customers, including those in political circles and high-risk industries. However, the country’s political instability changed purchasing behavior. Mohammad Shahidul Islam, general secretary of Bangladesh Refurbished Vehicle Importers and Dealers Association (BARVIDA), says this steady decline is the result of many factors.

“We have reached a point where business has slowed down dramatically,” Islam told The Business Standard. “Our customers are being much more cautious, evaluating the political and economic environment before investing.” The hesitation is most noticeable in the luxury segment, where demand for cars priced above Tk1 crore has fallen to a fraction of previous levels.

Luxury car purchases, once popular among the wealthy, are now perceived as financially risky. Mohammad Bin Sultan Shopan, senior marketing executive at Xoom Auto, echoed Islam’s concerns, reporting near-zero demand for refurbished cars worth over Tk1 crore. Cars in the Tk80 lakh to Tk1 crore range, which once saw sales of around ten units a month, have now dropped to four units in recent months.

It’s not just about financial risk; expensive cars attract attention and many now avoid this visibility. “What people don’t realize is that even those who can afford it are reluctant to spend due to social scrutiny,” Motors Bay’s Khan said, noting that social factors are increasingly influential. he said.

Economic pressures increase the crisis

The already swollen economic atmosphere has placed more burden on the luxury car market due to increasing import taxes and fluctuating exchange rates, making these vehicles more costly. The Tk3-4 lakh increase in the price of large engine cars due to high import duties and weakening Taka has alienated potential buyers from the luxury segment.

“There is a lot of talk about income sources for purchasing luxury cars, but I estimate that about 80 percent of our customers are legitimate business people,” Islam said. “This decline is not just about one problem. The dollar crisis and rising import costs are turning these cars into luxury products that are beyond the reach of even the wealthy few.”

The dollar crisis also made it difficult to obtain a Letter of Credit (LC) for imports. Islam explained that LCs are no longer a priority issue as banks are now willing to issue them. However, LC numbers dropped due to slowdown in demand. He added that the main factor is political stability, which directly affects consumer confidence.

Switching to lower priced models

As luxury cars fall out of favor, buyers are turning to more affordable options. Dealers state that although sales remain weak, showrooms are seeing relatively better performance for cars within Tk50 lakh. This cost-conscious trend is evident with sales of cars priced between Tk60 lakh and Tk70 lakh falling by 50%, while those below Tk50 lakh are performing comparatively better. But even in this category, sales have fallen to around 60% of previous levels, according to Shopan.

Dealers are responding by appealing to budget-conscious customers with extended warranties and after-sales service. “We are seeing more demand for cars below Tk 50 lakh, but interest does not always lead to purchases,” Shopan said.

Look ahead

For many in the auto industry, today’s crisis is reminiscent of 2007-2008, when political and economic uncertainty during Bangladesh’s caretaker government made wealthy buyers hesitant to invest in luxury purchases.

Islam believes that the market’s recovery may depend on an improving political and economic environment. “This is a temporary setback,” he said, hoping business will pick up early next year. “We hope that improvements in the rule of law and political stability will eventually translate into recovery in our industry.”

Still, the situation is dire: As luxury car sales decline, the effects are spreading across the entire automotive industry. The government’s recovery efforts, although significant, were not sufficient to counter inflation and the weakening Taka; both eroded purchasing power and further reduced demand.

Islam emphasized that market recovery will depend on government intervention and a renewed spirit of openness in dialogues with key stakeholders. “An interim government that listens to the concerns of businesses can help reduce concerns and build trust,” he suggested. “To make progress, we need to focus on nation-building, not politics.”

With so many overlapping factors negatively impacting Bangladesh’s luxury car market, the future is uncertain. But industry players such as Islam remain optimistic that stability will eventually relieve some of the pressure and allow the luxury car market to grow once again by the beginning of next year.