The 2025 Budget introduces key changes that will affect car prices in Bangladesh, including higher taxes on imports and incentives for green vehicles. Here’s what you need to know:
- Advance Tax (AT) Increase: AT on car imports rises from 5% to 7.5%, adding about ৳1 lakh to a car priced at ৳40 lakh.
- Higher Costs for Petrol/Diesel Cars: Additional duties and a new carbon tax make conventional vehicles pricier.
- Green Vehicle Incentives: Electric and hybrid cars assembled locally now face only 33% tax, compared to 89% for imports. VAT exemptions for local production aim to lower costs further.
- Impact on Used Cars: Rising new car prices push buyers toward used and reconditioned vehicles, but limited supply may drive up prices in this segment.
The government aims to promote local manufacturing and increase the share of electric vehicles to 30% by 2030, offering significant cost benefits for eco-friendly options. Buyers should act quickly before higher taxes fully take effect or consider green vehicles for long-term savings.
বাজেট ২০২৫-২৬: যেসব পণ্যের দাম বাড়ছে ও কমছে | National Budget 2025-26 | Channel 24
Budget 2025 Policy Changes Affecting Car Prices
The Budget 2025 introduces several policy updates that are set to impact how much people in Bangladesh pay for cars. These changes will not only influence individual car prices but also reshape the overall automotive market. Adjustments in import duties, tax structures, and incentives for environmentally friendly vehicles highlight the government’s broader direction. Here’s a breakdown of the key changes.
New Import Duties and GST Rates
Import duties are seeing some noticeable shifts. The advance tax (AT) has increased from 5% to 7.5%, which means an extra Tk1 lakh for a car priced at Tk40 lakh. Additionally, the government plans to reduce tariffs by 10% annually and simplify taxes on five-year-old vehicle imports. There’s also talk of phasing out certain customs and regulatory duties to ease the cost burden.
For context, the government collected Tk12,789 crore in AT revenue during FY24, while FY25 (up to April) brought in Tk11,593 crore.
"Once AT is paid at the import stage, it’s not collected again on local sales. The government gets nothing more."
– Md Shahidul Islam, former Vice President of the Bangladesh Reconditioned Vehicles Importers and Dealers Association
Tax Benefits for Electric and Hybrid Cars
Budget 2025 introduces substantial incentives for electric and hybrid vehicles, especially those manufactured locally. The total tax and duty burden for these cars has been slashed to about 33% for locally made models, compared to the 89% duty currently levied on imported electric and hybrid cars (up to 1500cc).
To further encourage local manufacturing, the government has granted full VAT exemptions for hybrid and electric vehicle production until 30 June 2030. Similarly, lithium and graphene battery manufacturers will enjoy full VAT exemptions until 30 June 2027, with only a 5% VAT applicable from 1 July 2028 to 30 June 2030.
These incentives are already making a difference. Since duty cuts were introduced in 2022 to encourage local car assembly, companies like Hyundai, Mitsubishi, and Kia have set up plants in Bangladesh. This has not only lowered prices but also boosted sales of several models.
"We aim to localise some plug-in hybrid cars, as demand is rising quickly due to their fuel efficiency. Localisation could reduce prices by 20%."
– Mostafizur Rashid Bhuiyan, Executive Director of Rancon Group
The government’s broader goal is to ensure 30% of vehicles on the road are electric by 2030. These tax benefits are a critical part of achieving that target.
Different Rules for Petrol Cars vs Green Cars
Traditional petrol and diesel cars face a tougher road ahead compared to their greener counterparts. Budget 2025 introduces higher import duties and a new carbon tax aimed at owners of multiple petrol or diesel vehicles. On the other hand, electric and hybrid cars enjoy significant advantages, including tax reductions and registration perks.
Hybrid cars already benefit from smoother registration processes and fewer administrative hurdles. Additionally, the government is promoting the sale of green vehicles by offering lower purchase and maintenance taxes compared to fossil fuel-powered cars.
Experts believe that further easing restrictions could boost investment in electric mobility:
"The government should relax these criteria; otherwise, e-bike and electric car manufacturing will struggle to attract investment."
– Sajedur Rahman, Managing Director of Asian Motorspex Limited
The policy also reflects a strong push for cleaner transportation. Locally made e-bikes, for example, are exempt from VAT until 30 June 2030. This comprehensive approach supports everything from two-wheelers to passenger cars, creating a market where traditional vehicles become pricier while green alternatives grow increasingly affordable through government support.
How New Car Prices Will Change
Budget 2025 is set to make petrol and diesel cars more expensive while introducing incentives and tax cuts for electric and hybrid vehicles, especially those assembled locally.
Expected Price Changes by Car Category
Under Budget 2025, the advance tax on petrol cars will rise from 5% to 7.5%. Meanwhile, green vehicles, particularly those manufactured locally, will benefit significantly. Locally assembled green cars will face a reduced duty of 33%, compared to a hefty 89% for imported models.
The most noticeable impact will be on vehicles priced between Tk20-40 lakh, which dominate the market by accounting for 51% of all car advertisements. This price bracket is expected to feel the biggest shifts due to the new policies. The automotive industry, which faced a historic slump in 2024 with the lowest sales in a decade as reported by BARVIDA, is now poised for recovery in 2025.
These changes highlight the growing cost advantages of local car assembly.
Local Assembly Benefits and Lower Prices
Local car assembly has emerged as a game-changer in making vehicles more affordable under the new tax framework of Budget 2025. Since 2022, tax incentives have encouraged companies like Hyundai, Mitsubishi, and Kia to set up local manufacturing plants, leading to reduced prices and higher sales.
Rancon Group, for instance, operates a factory in Gazipur that assembles Mitsubishi and MG cars. The company is now planning to expand into hybrid vehicles to meet rising demand.
"We aim to localise some plug-in hybrid cars, as demand is rising quickly due to their fuel efficiency. Localisation could reduce prices by 20%".
– Mostafizur Rashid Bhuiyan, Executive Director of Rancon Group
This 20% reduction translates to significant savings. For example, a Tk30 lakh hybrid car could see a price cut of Tk6 lakh through local assembly.
Other manufacturers are also stepping up. Bangladesh Auto Industries Limited has established a fully operational electric vehicle manufacturing facility in Chattogram, while Asian Motorspex Limited is building a factory to produce plug-in hybrid cars locally.
The benefits of local production are already evident in the electric bike market. Imported e-bikes face a 37% duty, while locally manufactured ones are taxed at just 11%. This same principle applies to cars, making local assembly the key to affordable eco-friendly transportation.
With the government aiming for a 30% electric vehicle market share by 2030, these incentives are likely to continue, ensuring long-term price stability for those opting for green vehicles over traditional petrol models.
Impact on Used and Reconditioned Car Prices
The policies introduced in Budget 2025 are not just altering the landscape for new car buyers; they’re also shaking up the market for used and reconditioned vehicles. These changes bring a mix of hurdles and opportunities for both buyers and sellers in these segments.
Higher Demand for Affordable Used Cars
With new car prices soaring, many middle-class buyers are now turning to the used car market as a more affordable option. Abdul Haque, President of BARVIDA, highlighted this trend:
"As four-wheeler prices moved beyond the reach of middle- and lower-middle-income families, both the import and sales of reconditioned cars in the country dropped sharply".
This shift has occurred even as overall vehicle registrations have declined. In 2024, only about 307,800 vehicles were registered, marking the lowest figure since 2015. This is a significant drop from 360,000 registrations in 2023. Despite this downturn, the Bangladesh used car market is projected to grow from USD 1.54 billion in 2025 to USD 2.17 billion by 2030, with an annual growth rate of 7.10%. The demand is particularly strong in Dhaka, which accounted for 54.25% of the country’s used car market revenue in 2024.
However, with economic uncertainties discouraging many sellers, the supply of quality used cars – especially those under three years old – is tightening. This scarcity is expected to drive up prices for these vehicles. At the same time, new duty structures aim to make reconditioned hybrid cars a more attractive option for buyers.
Lower Duties on Reconditioned Hybrid Cars
To provide cost-effective and environmentally friendly alternatives, the government is focusing on reconditioned hybrid vehicles. Currently, new hybrid cars cost 35–40% more than their reconditioned counterparts. BARVIDA has been advocating for changes to make importing these vehicles more feasible. As Habibullah Dawn, another BARVIDA President, explained:
"There is no special duty facility for reconditioned hybrid car imports, although these cars are more environment-friendly and fuel efficient. Importers are not importing these cars due to high duty rate".
BARVIDA has proposed several reforms to the National Board of Revenue (NBR). These include creating separate HS codes for hybrid car imports and revising supplementary duty slabs, with depreciation rates ranging from 0% for current-year models to 50% for cars that are five years old. If adopted, these changes could significantly reduce the cost of imported hybrid cars, making them a viable alternative to traditional petrol vehicles.
Additionally, the government is exploring reductions in taxes on used car imports for the 2025–26 fiscal year. Proposed measures include allowing imports of vehicles up to five years old and eliminating Additional Customs Duty (ACD). However, challenges remain, such as foreign currency shortages and rising prices in sourcing countries. For buyers interested in reconditioned hybrids, timing purchases to coincide with policy updates and navigating current supply issues will be key to securing better deals.
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New Market Trends and Buyer Preferences
With the changes introduced in Budget 2025, Bangladeshi consumers are rethinking their car-buying decisions. Shifts in demand and purchasing habits are becoming evident, particularly in terms of size and technology preferences.
More Buyers Choosing Small, Fuel-Efficient Cars
Budget 2025’s financial adjustments are nudging buyers towards smaller, more economical cars that balance affordability with practicality. This shift is reshaping the small car market in Bangladesh, with revenue expected to hit US$41 million in 2025 and grow annually by 2.01%, reaching US$45 million by 2029.
Small cars, averaging around US$14,000 (≈৳16.8 lakh), are significantly cheaper than the overall average vehicle price of US$27,330 (≈৳32.8 lakh). Their popularity is largely driven by urban buyers prioritising fuel efficiency to manage long-term costs. For instance, sedans make up 36% of vehicle listings, reflecting their appeal for cost-conscious buyers.
However, smaller cars come with trade-offs. While they excel in fuel efficiency, their smaller engines may struggle under heavy loads. Despite this, their practicality for navigating Bangladesh’s congested urban areas and their affordability ensure their rising demand. By 2029, sales in this segment are projected to reach 3,200 units.
Growing Popularity of Electric and Hybrid Cars
As small, fuel-efficient cars gain traction, greener alternatives like electric and hybrid vehicles are also capturing attention. Government initiatives aim to achieve a 30% electric vehicle market share by 2030, with Budget 2025 introducing tax policies to encourage this transition.
Tax incentives are playing a key role in making these vehicles more accessible. Imported electric and hybrid cars face an 89% duty, while locally manufactured models are taxed at just 33%, offering buyers considerable savings.
The rising cost of petrol since August 2022 has further pushed consumers towards energy-saving options. Local manufacturing is expected to make these vehicles even more affordable. Mostafizur Rashid Bhuiyan, Executive Director of Rancon Group, noted:
"We aim to localise some plug-in hybrid cars, as demand is rising quickly due to their fuel efficiency. Localisation could reduce prices by 20%".
Hybrid cars currently dominate this space, as the lack of widespread charging infrastructure makes fully electric vehicles less practical. Here’s a snapshot of hybrid car prices in Bangladesh:
| Vehicle Model | Price Range |
|---|---|
| Toyota Corolla Hybrid | ৳32-35 lakh |
| Hyundai Elantra Hybrid | ৳34-38 lakh |
| Kia Niro Hybrid | ৳36-40 lakh |
| Toyota Prius | ৳38-42 lakh |
| Toyota Prius Plug-In Hybrid | ৳42-45 lakh |
| Kia Niro Plug-In Hybrid | ৳40-44 lakh |
| Ford Escape PHEV | ৳45-48 lakh |
| Toyota Camry Hybrid | ৳50-55 lakh |
| Hyundai Tucson Plug-In Hybrid | ৳52-56 lakh |
While hybrid vehicles are currently more popular, battery electric vehicles (BEVs) are expected to grow rapidly over the next decade. However, the transition is gradual. Gasoline-powered vehicles still dominate the used car market, accounting for 75%, with diesel vehicles making up around 20%.
Concerns about the environment and supportive government policies are also influencing this shift. As local production expands and charging stations become more common, the adoption of electric and hybrid vehicles is likely to accelerate.
Tips for Car Buyers and Sellers After Budget 2025
Budget 2025 has brought notable changes to the car market. Here’s how you can take advantage of these shifts to save money and make informed decisions, whether you’re buying or selling.
Best Time to Buy a Car for Lower Prices
Timing your purchase can make a big difference in how much you spend. By late 2025, expect new car prices to drop by 3–5% as manufacturers ramp up cash discounts and introduce zero-percent financing options.
Ray Shefska, Co-founder of CarEdge, sheds light on how automakers handle pricing:
"They don’t like to lower MSRPs, it’s almost seen as a sign of defeat. But what automakers are more than willing to do is increase incentives. That’s exactly what I expect to see in 2025."
On the other hand, prices for used and reconditioned cars are predicted to remain steady throughout 2025. While interest rates are gradually falling, potential tariffs on imports may slow down further reductions. This creates a unique opportunity to weigh the pros and cons of buying new versus reconditioned vehicles.
Choosing Between New and Used Cars
Budget 2025 highlights the trade-offs between new and reconditioned cars. New cars come with warranties and the latest features but lose value quickly. In contrast, reconditioned cars are easier on the wallet upfront and tend to retain their value better.
The demand for new cars is rising, especially among younger buyers who prioritise modern features and warranties. Meanwhile, reconditioned cars remain popular, particularly among middle and upper-middle-class buyers. In Bangladesh, imported used cars are typically up to five years old.
When financing a vehicle, compare loan options from various banks and review their interest rates and terms carefully. Additionally, it’s important to research the availability of after-sales service and spare parts for your chosen model to avoid unexpected costs down the line.
Green vehicles also stand out as a smart choice due to government incentives.
How to Use Electric and Hybrid Car Incentives
With local assembly driving down costs, electric and hybrid vehicles are becoming more appealing. Budget 2025 has reduced duties to about 33% for locally assembled green vehicles, compared to 89% for imported models.
To maximise your savings, consider locally manufactured EVs and hybrids. The government is offering duty benefits to encourage local production of green vehicles and batteries. This push for local manufacturing is expected to bring car prices down even further. Plug-in hybrid cars are also a practical option, especially given the current limitations of charging infrastructure.
While EVs might have a higher upfront cost, the long-term savings on fuel and maintenance can make them a worthwhile investment. For additional savings, apply for tax exemptions 2–3 months in advance, ensuring your documentation is complete.
Summary: Budget 2025’s Effect on Bangladesh Car Prices
The Budget 2025 policies are set to impact both new and used car markets in Bangladesh significantly. One of the most immediate changes for consumers is the increase in Advance Tax from 5% to 7.5% – a shift that will likely raise car prices across the board.
On the other hand, there’s some relief for buyers of older vehicles. The government has reduced tariffs on older models by 10% annually and eased taxes on five-year-old car imports. Additionally, there’s talk of gradually eliminating certain customs duties on vehicles, which could further benefit this segment.
However, commercial vehicle owners face a tougher challenge. Trucks and prime movers will see a notable rise in tax obligations, which could influence costs in logistics and transportation sectors.
For individual buyers, timing and choice are key. Those considering environmentally friendly options might find savings in locally assembled vehicles, which could be a more economical choice under the new policies. Traditional car buyers, however, might want to finalise their purchases before the increased rates come into full effect. Staying updated on future changes in import duties and tariffs will also be crucial.
FAQs
How will the increase in advance tax affect the price of new cars in Bangladesh?
The rise in advance tax (AT) is set to make new cars pricier in Bangladesh, especially those with larger engine capacities. Depending on the vehicle type and engine size, this could increase the price by Tk 2,00,000 or even more.
For car buyers, this translates to higher upfront expenses. It’s crucial to reassess your budget and financing plans before making a purchase. The effect will differ across various models, with luxury and high-capacity vehicles expected to face the steepest price increases.
What advantages do locally assembled electric or hybrid vehicles offer under the new Budget 2025 policies in Bangladesh?
Choosing locally assembled electric or hybrid vehicles under Bangladesh’s Budget 2025 policies offers several notable advantages:
- Reduced taxes and duties: Locally assembled electric and hybrid vehicles benefit from up to a 33% reduction in taxes. Additionally, import duties on these vehicles are significantly lower compared to fully imported models, which can face duties as high as 89%.
- Lower prices for buyers: Vehicles assembled locally can cost up to 20% less, making them more budget-friendly for consumers.
- Boost to local industry: Opting for locally assembled cars helps strengthen Bangladesh’s automotive sector. This can lead to improved availability of vehicles, better servicing options, and overall market growth.
These benefits make locally assembled electric and hybrid vehicles an attractive and economical option in Bangladesh’s growing automotive market.
How will Budget 2025 affect the availability and prices of used and reconditioned cars in Bangladesh?
The adjustments in Budget 2025, including higher import duties and taxes, are set to have a noticeable effect on Bangladesh’s market for used and reconditioned cars. With increased import costs, the availability of these vehicles is likely to shrink, pushing prices upward.
Currently, reconditioned cars are generally priced between BDT 20,00,000 and BDT 30,00,000, but these additional costs may make them even pricier. Similarly, while demand for used cars is expected to remain steady, the limited supply could result in further price hikes. Both buyers and sellers should keep these market changes in mind as they plan their transactions in this shifting landscape.
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- Pros and Cons of Electric Cars in Bangladesh
- 5 Ways Fuel Costs Shape Used Car Prices
- Restricted Vehicle Types: Bangladesh Import Rules
- EV Market in Bangladesh: Are Electric Cars the Future?
