Bangladeshi duty-cut leads to spurt in motorcycle sales

This photo shows a showroom of a local automobile company in the capital displaying wide range of motorcycles. Independent File Photo

Motorcycle sales year-on-year have risen nearly 25 per cent to 3.50 lakh units in 2017 in Bangladesh, after the government lowered the supplementary duty on imported parts and components of two-wheelers from 25 per cent to 20 per cent. Runner Automobiles Ltd is a leading motorcycle manufacturer in the country. Runner Automobiles’ vice-chairman Mozammel Hossain told The Independent that just 2.40 lakh units of motorcycles were sold in 2012, but in 2016, this figure went up to approximately 2.70 lakh units.

“The year 2017 was a boom period for the industry, in which 3.50 lakh units of motorbikes were sold. We expect this to reach around 4 lakh units at the end of 2018,” Hossain predicted.

Explaining the reasons, Hossain said to encourage an emerging motorcycle assembly and manufacturing industry, the government has lowered the supplementary duty on completely knocked down (CKD) units of motorcycle from 25 per cent to 20 per cent. This has helped motorcycle assemblers to backward-integrate more easily, he explained.

When asked whether or not Runner fully manufactures motorcycles, Hossain replied, “We produce 80 per cent of the motorcycle components in our manufacturing plants except the engine and some electronic parts.”

Motorcycle parts like plastic-injected moulds, motorbike frames made of steel, and motorbike paint colours are all manufactured and processed in Runner’s plant, Hossain said. Runner produces more than 40,000 units of motorcycles per year and sells 20,000 to 25,000 units per year, Hossain added.

The local motorcycle market is currently worth approximately Tk. 3,000 to 3,500 crore, disclosed Hossain.

Asked about the challenges confronting the sector, Hossain said the government had recently changed some policies to encourage the local manufacturing industry. As a result, Hero Honda, in a joint venture with the Nitol-Niloy Group, is building a motorcycle plant in Jessore.

Queried about exports, he said Runner is currently exporting motorbikes to Nepal.

Runner Automobiles sales executive Obaydul Islam told The Independent that Runner aims to make cheap and affordable motorcycles. “To make motorcycles accessible and affordable, we provide customers with instalment facilities for 12 months, 18 months and 24 months,” he said.

“The ‘Runner Duranto’ is the cheapest motorcycle manufactured by us. It's for the common people. It costs around Tk. 59,000,” he added.

TVS Auto Bangladesh chief executive officer Biplob Kumar Roy told The Independent that the government has reduced the tax on mobikes and,

subsequently, all the brands have reduced the maximum retail price (MRP) on their mobikes. “Our motorbike sales have risen by up to 100 per cent compared to last year,” he said.

In some cases, the drop in prices is more than Tk. 25,000. “This has widened the customer base and now a person who is earning around Tk. 25,000 per month is considering owning a bike,” he said.

Talking about market opportunities, Roy said, “Two-wheeler penetration in Bangladesh is still very low if we consider our population and economic growth. Hence, there are ample opportunities waiting for us to penetrate the markets.”

Talking about the challenges in this sector, he explained, “Currently, we don’t have any long-term business-friendly policy in the two-wheeler sector. Such a policy would drive us to establish backward linkages and support local manufacturing.”

As the industry is shifting its manufacturing process, backward linkages like vendor development will be a great challenge in the coming days, as no company can produce 100 per cent parts and components at its own plant, he added.

So, there should be quality vendors that would manufacture components for all companies, and this is the ongoing practice throughout the world, he said. “We need to have a proper policy from the government that

would support the vendor development process and encourage the global vendors to set up their plants here,” he added.

Talking to The Independent, an official of Grey MC, Minhajur Rashid Bhuiyan, said, “We are a head dealer of Bangladesh Honda Private Ltd (BHL). We represent Honda for Muhammad-pur and adjacent areas.”

“We also offer sales, service and spares under a single roof for Honda bike users,” he said.

He said, “Our bike sales have increased to 35 per cent compared to the previous year. ‘Honda CB Hornet 160R’ is the latest model, the highest selling product so far. It is available in all Honda showrooms. It costs Tk. 199,800.”  

Editor: Wang Shixue