Festive Season Turns Nightmare

For years, Nepal’s automobile market has relied on the festive season as its lifeline. Dashain and Tihar were not just religious occasions—they were economic stimuli, when dealerships brimmed with eager buyers and sales teams worked around the clock. Traditionally, around 40–50% of the country’s annual vehicle sales occurred during this short, vibrant period.

Families splurged on cars, while students and young professionals purchased motorcycles and scooters. It was a celebration of economic vitality, reflecting both the resilience and aspirations of the sector.

But that rhythm has been shattered this year. Instead of festive prosperity, dealerships across the country are facing disruption, destruction and uncertainty. Political unrest, logistical hurdles and operational paralysis have collided to upend the sector.

The crisis began in early September, when protests erupted in Kathmandu and other cities. Led primarily by Gen Z activists demanding an end to corruption and the lifting of social media bans, the demonstrations quickly escalated. Dozens of car showrooms were vandalized or destroyed.

Thapathali, historically the epicenter of Nepal’s automobile trade, bore the brunt of the unrest. Showrooms representing major brands such as Suzuki, Tata, Hyundai, Citroën, Xpeng and AION suffered varying degrees of damage.

“The unrest has hit the automobile sector severely. Several showrooms and warehouses were vandalized, vehicles destroyed and inventories looted. Beyond the physical damage, the incident has shaken investor confidence and disrupted the entire value chain,” said Karan Chaudhary, President of NADA Automobiles Association of Nepal.

CG Motors, the flagship automobile distributor of the Chaudhary Group, was among the companies facing heavy losses. Representing brands like Xpeng, AION, Smart, AVATR, Hero and Riddara, the company said some 18 vehicles were destroyed in the incident.

“We lost four Xpeng cars, two Smart, one AVATR and eight AION as well as eight or nine Hero motorcycles. Showrooms outside the Valley were also affected,” Kiran Acharya, Marketing Head of CG Motors, told New Business Age.

 

Tata Motors dealerships were also hit hard. According to Sipradi Trading, which represents Tata in Nepal, four electric vehicles—including Tiago, Punch, Nexon and Curvv—were destroyed, while three combustion-engine cars were vandalized. Similarly, the Suzuki showroom managed by CG Motocorp was set on fire, resulting in two total losses and partial damage to six other vehicles. Mahindra’s Thapathali outlet, run by Agni Incorporated Pvt Ltd, lost four vehicles to fire. Hyundai’s Laxmi Intercontinental showroom saw a Creta EV set ablaze. Nissan vehicles at Sharda Group’s Naxal showroom were damaged, and multiple dealerships in Kalanki and beyond Kathmandu Valley witnessed similar attacks.

Kapil Shiwakoti, CEO of CG Motors and Executive Committee member of NADA, said the incidents over those two days have deeply affected public sentiment.

"People are afraid. While Nepalis often move on quickly, the current market atmosphere is negative. Damaged showrooms and vehicles are discouraging buyers. The livelihood of employees is at stake. Operating showrooms has become extremely difficult.”

From Optimism to Paralysis

The timing of the crisis was particularly damaging. Just a month ago, two major auto expos—NAIMA Nepal Mobility Expo and NADA Auto Show—had generated around 4,000 vehicle bookings. The rapidly growing electric vehicle (EV) market had fueled optimism for a robust festive season.

However, deliveries commenced only after the start of the Dashain festival, following the reopening of two border crossings with China. Dealers, encouraged by strong bookings at both auto shows, faced significant challenges in getting the vehicles to customers. The Tatopani border reopened on September 22 after a two-month closure, while the Korala border began operations on September 14. These reopenings allowed dealers to resume deliveries, with cars ordered via Korala and vehicles previously held up at Tatopani finally arriving in Kathmandu.

Dealers had placed orders well in advance for Dashain delivery, as early as Bhadra (mid-September). However, delays in clearing landslides at Kodari had temporarily halted vehicles at the Chinese border. In previous Dashain seasons, deliveries were usually completed before Ghatasthapana, but this year the delays pushed deliveries back by several days.

The situation has worsened with stalled registrations and ownership transfers. Fires in government offices have disrupted the issuance of registration certificates (bluebooks) and delayed payment processing. Showrooms are piling up with ready-for-sale vehicles that cannot reach customers. Dealers are caught in a bind: inventory is growing while loans, interest payments and operational costs continue unabated.

Rebuilding Amid Uncertainty

Dealers now face the dual challenge of rebuilding showrooms and fulfilling pending orders. Insurance claims may provide some relief for losses caused by arson, but the process is slow and bureaucratic.

Shiwakoti estimates that full recovery could take at least a year. He called for urgent government support to bail distributors out of this crisis. “Automobile and LC–TR loans should be converted into primary loans.

Installment payments cannot be managed under current conditions. Insurance claim settlements must be reformed. If 50–60 percent of insurance payouts were advanced, it would provide immediate relief,” he added.

The NADA Automobiles Association has reiterated its commitment to stabilizing the market, highlighting the sector’s role in employment, trade and industrial activity.

Government Response

Finance Minister Rameshore Khanal and Finance Secretary Ghanashyam Upadhyaya visited the damaged showrooms on September 16. They inspected outlets of Tata, CG Motors, Mahindra and Hyundai in Thapathali. During the visit, Khanal promised measures to boost private-sector morale and provide concessions to auto entrepreneurs.

In a relief to the automobile sector, the Nepal Rastra Bank has also raised the loan-to-value ratio for vehicle financing. Currently, banks can finance up to 60% of a vehicle’s value. For commercial transport vehicles damaged during the September 8-9 protests, however, the ratio has been increased to 80%.

Anup Baral, Managing Director of Narayani Auto Business and Invitee Central Working Committee member at NADA, said the country's automobile industry has endured multiple shocks: the 2015 earthquakes, India’s blockade, the COVID-19 pandemic and government restrictions on luxury imports over the past decade.

Baral called for resilience in the current crisis. “The automobile industry directly employs more than 100,000 people and indirectly supports nearly a million. We cannot let employment be disrupted again. If the government can take an oath under a tent, we too can sell vehicles from open spaces if needed. The auto sector contributes up to 25% of Nepal’s total revenue. We must rise from the ruins and rebuild stronger.”

Employment, Investment and EV Growth

Nepal’s automobile industry is not just about sales; it is a major contributor to jobs, tax revenue and foreign trade. Direct employment in dealerships, manufacturing partnerships and import services supports over 100,000 workers, while ancillary sectors—including logistics, insurance and finance—indirectly sustain nearly a million livelihoods.

Electric vehicles represent the fastest-growing segment of the industry. However, the recent unrest has highlighted the sector’s vulnerability to political instability, logistical bottlenecks and policy gaps. Showroom damage, border closures and stalled vehicle registrations have combined to create a perfect storm, threatening both short-term sales and long-term investor confidence.

Road to Recovery

Industry leaders say coordinated government action is essential to steer Nepal’s automobile sector out of crisis. Accelerating customs and banking operations during peak seasons could prevent further supply chain delays, while reforming insurance claim procedures to allow partial payouts would help dealers quickly rebuild showrooms and replenish inventories. Likewise, keeping border points open—especially for electric vehicle imports—is seen as crucial to sustaining market growth, and relief on LC–TR and automobile loan repayments could ease severe cash flow pressures.

Despite the challenges, Shiwakoti and Baral are cautiously optimistic. While they acknowledge that full recovery will take time, they are confident that the industry can weather the disruption and regain momentum with the right government support and operational flexibility.

This article was first published in the October 2025 edition of New Business Age magazine.