KATHMANDU: Small cars are rapidly losing market share in Nepal despite lower taxes and multiple model options in the market.
Nepal’s car market has long remained small, with annual sales averaging around 12,000 to 13,000 units. However, the share of hatchback and compact cars has been falling continuously over the past two years.
Although the government offers lower taxes on small cars, imports and sales remain weak. Economists say limited disposable income and weak purchasing power are major reasons behind the decline.
Economist Biswo Gauchan said consumers with stable and higher income generally prefer larger vehicles, while lower middle-income groups are still unable to prioritize car ownership.
“People first focus on buying a house and then a vehicle. Small cars are no longer the first choice for buyers with higher purchasing capacity,” he said.
The decline in petrol hatchback sales has also weakened the overall small car segment.
In 2024, hatchback and premium hatchback models held around 33 percent share of Nepal’s total car imports. Nepal imported 13,782 cars that year, including 4,559 units from the small car segment.
Models like BYD Dolphin and Tata Tiago played a major role in maintaining the segment’s share.
The market weakened further in 2025. Nepal imported 15,887 four-wheelers during the year, but only 3,591 units belonged to the hatchback category. The segment’s market share dropped to 23 percent.
Popular models during the year included Dongfeng Nammi Box, Tata Tiago and BYD Dolphin.
The latest 2026 data shows an even sharper decline. In the first three and a half months of the current year, only 409 hatchback cars were imported. Nepal imported 3,212 cars during the same period, meaning hatchbacks accounted for just 12 percent of total imports.
Despite weak demand, buyers still have several options in both petrol and EV segments. Compact models currently available in Nepal include BYD Atto 1, Dongfeng Nammi Box, Tata Tiago, Hyundai Grand i10, Suzuki Swift, Suzuki Celerio, Kaiyi e-Qute and MG Comet.
Industry insiders say the growing preference for SUVs and larger vehicles is gradually shrinking Nepal’s small car market.
