The GDP development of Bangladesh has elevated by 4%, the per capita earnings reached $2097 in June 2021. This exponential development fuels the demand for private transport. As soon as private transport was thought-about a luxurious now’s turning into extra of a necessity for Bangladeshi. However does it actually imply that the car business has a superb future forward? Earlier than leaping to the conclusion we have to consider current and previous market situations and the longer term potentialities of this business. So, let’s look at the way forward for the car business in Bangladesh.
Automotive Business Background
From the start, there was no vehicle manufacturing plant in Bangladesh. However we’ve assembled business from the start. Pragoti Industries Restricted (PIL) is one in all Bangladesh’s oldest and largest automotive assemblers. Since its begin in 1966, the enterprise has produced roughly 50,000 automobiles. Together with Pragoti different companies like Rangs Motors, PHP Motors stepped into the car meeting business of Bangladesh.
In addition to, the car market has an enormous dependency on imported autos. Because of the heavy import tax, model new automobiles will not be the popular one for Bangladeshis. Second-hand automobiles are generally known as reconditioning autos that dominate many of the vehicle market. Based on the BBS In 2020 Bangladesh imported 2,76,094 autos.
Current Market State of affairs
Whereas the nation’s passenger automobile sector stays small in comparison with its Asian counterparts, the variety of autos per 1,000 folks is simply 2.5. Right this moment, the market has exploded and has turn into a billion-dollar enterprise (BDT 84,969 million).
4 Wheelers Automobile Market
Passenger autos are hottest within the 4 wheeler market. It grabs a 5.3% vehicle market share. Among the many passenger autos Sedan is usually generally known as personal automobiles grabs the 55% market share of the passenger automobile market. Based on the Bangladesh Street Transport Authority, 12,403 items of passenger autos have been registered in 2020. 4911 SUVs and 2779 items of Multi-Objective Automobiles (MPV) autos have been registered in 2020.
Japanese imported reconditioned automobiles are most most well-liked in Bangladesh. In 2020 82% of the passenger autos have been imported from Japan. Although there have been different choices like China, Germany, India, Malaysia.
Bangladesh’s industrial automobile sector is reliant on Asian imports, significantly India, Japan, and China. TATA, Ashok Leyland, and Eicher dominate the Bangladeshi truck market. Chinese language producers dominate the LCV & Pickup sector. Some Japanese and European vans and building gear function in Bangladesh, albeit in small numbers. The inter-city passenger bus market is dominated by Japanese and European producers. The posh ac bus market is dominated by Scania, Volvo, MAN, Mercedes-Benz, and Hyundai Universe. Hino and ISUZU are additionally current on this market. Within the non-ac bus business, Hino is the market chief and has essentially the most shares. Within the intra-city market, Indian producers have taken the lead. TATA, Ashok Leyland, and Eicher dominate the intra-city market.
2 Wheelers Automobile Market
82% of the car business is dominated by 2 wheelers. The two wheeler market began to develop rapidly within the fiscal 12 months 2016-17 when the federal government lowered the extra tax on imported two-wheeler elements by 25% to advertise native manufacturing. Inside half a 12 months of the choice, motorcycle costs fell from Tk 30,000 to Tk 50,000, and distributors provided equal month-to-month funds and particular reductions for sure festivals. Bajaj, TVS are the main gamers within the 2 Wheeler market however Runner, Mahindra, Yamaha, Suzuki are additionally contributing a significant half within the business.
The Way forward for Automotive
Because of the excessive import tax, the automotive market cannot expertise excessive development in model new automobiles. However the excellent news is, the meeting business is rising progressively and that reveals the sunshine of hope within the business.
Honest Expertise, the only distributor of the Hyundai automobiles in Bangladesh intends to spend 125 million to construct an meeting facility on the Excessive-Tech Park of the Authorities. PHP Motors constructed a 400 core meeting manufacturing facility in Chattogram. Uttara Motors Ltd is one other dealership that has shifted to native automobile meeting. They’re spending $33.63 million to assemble a Maruti Suzuki meeting manufacturing facility in Bangladesh. One other native automotive agency Bangladesh Auto Industries Ltd. (BAIL), is establishing a battery electrical automobile (BEV) manufacturing facility on Bangabandhu Industrial Park. The agency supposed to spend $200 million initially, with the venture’s total funding reaching $1 billion inside 5 years. They supposed to make two wheelers, three-wheelers, sedans, hatchbacks, and SUVs, in addition to pick-up vans, mini-trucks, and multifunctional autos. They intend to promote SUV at 25 Lakh BDT, Sedan at 12 Lakh, Hatchback at 8 Lakh BDT or much less.
Together with the native funding Bangladesh received an enormous overseas funding in cars. In August 2018, Chinese language automaker Foton Motor introduced plans to construct industrial automobiles in Bangladesh alongside ACI Motors. In Could 2019, Mitsubishi Motors introduced a $100 million funding in Bangladesh to fabricate its branded automobiles. The agency used the funds to construct a automobile meeting manufacturing facility in Chittagong’s Mirsarai Financial Zone.
Challenges for Future Progress
In Bangladesh, imported autos have unusually excessive taxes and customs that begin at 128% and attain as excessive as 700% relying on the engine capability. In addition to supplementary obligation, one has to pay 25% customs obligation, 3% regulatory obligation, 5% commerce vat, and 15% vat which will increase the worth of the imported automotive.
COVID-19 additionally has a big impact on the expansion of the automobile market. The general gross sales dropped through the pandemic. Based on the specialists, advertising and marketing is rising on common 15-20% through the pandemic.
Bangladesh has an enormous potential within the vehicle market. Big investments are coming for the meeting business. Already many manufacturers and native industries began to assemble bikes and 4 wheelers in Bangladesh. Nevertheless, the excessive tariff on imported automobiles restricts the general development of the imported automobile. If the federal government reduces the visitors on the car the market would expertise exponential development sooner or later.