DHAKA - CAR sales in impoverished Bangladesh's capital hit a record high in 2008, bucking a gloomy global trend for the auto industry but threatening to push the city's crumbling traffic system towards collapse.

The Bangladesh Road Transport Authority (BRTA) said a record 14,944 new and reconditioned cars were sold in Dhaka last year, up 46 per cent from 2007.

'Car sales in the capital hit an all-time high in 2008. It's more than twice the number of cars sold in 2006,' said Sitangsu Shekhar Biswas, a deputy director of the BRTA, citing figures released earlier this week.

The number also represents 90 per cent of nationwide car sales, he said.

Government figures do not differentiate between new and used car sales.

Authorities said car sales averaged 5,000 annually for more than a decade until 2006 when they started to spike thanks to two straight years of six percent economic growth.

Car traders said the availability of easy financing had helped fuel the record-breaking sales run since 2006.

'Some 90 per cent of the cars we sell are being financed by private banks' consumer financing facilities. Thanks to easy credit, even middle income people can now afford cars,' said Abdul Haq, owner of leading car shop Haq's Bay.

'In addition, banks, big corporate houses give interest-free loans to employees to buy cars. It's also now the most-frequently used carrot to lure away mid-managers,' he said.

As the global economic slump claims vehicle sales among its many victims, Bangladesh is one of the few countries, along with China, where car sales continue to grow - though official Chinese figures show a slowdown.

While that might be good news for Bangladesh's short-term bottom line, transport and urban development experts shudder at the explosion of car sales in the city of more than 12 million people, already notorious for its traffic congestion.

'It represents the worst nightmare for Dhaka and its millions of commuters,' Mohammad Rahamatullah, a former UN transport expert, told AFP.

Dhaka's population was less than half a million when it became the capital of independent Bangladesh in 1971. As it has grown, transport infrastructure has not kept pace.

'Such a huge growth in car sales has already started to take a toll on the capital. Traffic jams are getting bigger and lasting longer. Already we spend three hours a day in jams,' Rahamatullah said, adding: 'Dhaka's traffic system is heading for total breakdown.'

According to government statistics, 170,000 motor vehicles including buses, mini-buses and cars ply the roads daily in Dhaka.

They jostle for space on narrow roads with another half-million cycle-rickshaws, so traffic here is among the slowest in the world.

Urban planner Nazrul Islam of Dhaka University called the rise in car sales 'frightening'.

'Dhaka does not have a mass transport system like a metro rail, commuter train or even a fleet of taxis,' Mr Islam said.

'Dhaka does not have even adequate footpaths for pedestrians, forcing people to hire rickshaws for the smallest rides,' he said.

'The government needs to take urgent steps to save the city from total chaos.' The newly-elected government that took power this month has put Dhaka's chronic congestion atop a list of priorities, pledging a major programme of infrastructure development 'to solve the public transportation problem and traffic jam in the capital'. -- AFP