Bangladesh 2020. Bajaj Auto is leader in a market down 9.3%

Bangladesh Motorcycles

Bangladesh Motorcycles Market breaks the growth in 2020 losing 9.3% from the record established in the previous year. However, government immediately reduced duties and tax over the sector and the market is expected to rebound in 2021. Bajaj Auto is market leader.

With a population of 167 million people and an annual GDP growth averaging over 7% in the last five years, and high remittance from expatriates, Bangladesh represents one of the World’s Top 5 emerging economy for the next decade. Despite doubled in the last five years, the pro capita income is still among the lowest in the World (US$1.829 in the 2019), but it is projected to double within the next five years.

The economic boom created a huge demand for individual mobility and the two-wheeler industry represents the most efficient solution, following the pathway already tracked by several others South Asian countries.

Fortunately, local governments have embraced this philosophy and have put in place a range of tax initiatives, import policies, incentives to innovation.

A decade ago the objective was to support the start-up of local production, creating barrier to imported vehicles and components, but in most recent years a more opened view has taken space and the government has reduced duties on imported parts (from 25% to 20%) and on imported models.

In the 2020 the market declined, first time in years, by 9.3% and the reaction was immediate, with a 50% cut on vehicles registrations duties effective in February 2021 We must remember that two-wheeler benefit from a lower VAT rate (since 2018)

Introduction of ride-sharing services in Dhaka and Chattogram in recent years has also contributed to a rise in demand for motorbikes.

Motorcycles Manufacturing

The Indian Bajaj Auto is producing locally since the 2015 and was immediately followed by TVS, Hero Motors, Suzuki and Yamaha.

The last to open a plan was Honda. Indeed, Honda opened its motorcycle plant in November 2018. The plant should be expanded in 2021 for a new capacity of 200.000 units.

Actually over 80% of two-wheelers sold in Bangladesh are locally manufactured.

In Bangladesh, the import duty is 45% keeping the motorcycles prices about 2.5 times higher than those in India. However, local manufacturers can agree with the government a discount on this duty, if they produce at least one fifth of the bike in the country.

Market evolution and perspectives

A decade ago, Bangladesh two-wheeler sales were below 10.000 units per year. Then the industry evolved rapidly, thanks to the investments of new local brands – like Runner and Walton, Indians companies – Bajaj Auto, Hero Motor and TVS -, and Japanese – Suzuki, Yamaha and Honda.

In the 2012 the market was already up 10 times compared with 5 years before, while kept steady growing until the 2016, when sales were not far from the quarter of a million. 

However, the new policy established by the government in the 2017 changed the industry perspective immediately booming the demand, thanks to the cut of motorcycles price in a range of 20% (both for imported and local made models) and a new life started.

In the following years the market boomed up doubling volume to hit the 487.000 units in the 2018 and finally at over 549.000 units in the 2019.

While Japanese brands are growing, the market is literally dominated by Indian brands, with Baja Auto leader with near 33% of share, followed by Hero Motor and TVS. Honda is fast growing and hold a market share near 11%.

There is a limit to the import of motorcycles with high engine displacement and this is the reason why top premium brands are not imported in the country. However, recently KTM landed in the country with 125 cc models.