Automotive Sector in Bangladesh:

The automobile industry in Bangladesh, as a whole, is growing. We have an estimated annual

demand of 30,000 units for the passenger vehicles among which brand new vehicles are
contributing 5,000 units. The car industry is not growing in Bangladesh in the way that it should
considering the present per-capita income, GDP and economic development of the country. The
cost is still too high relative to the affordability of the people in the country. Demand for brand
new cars is lower due to higher costs compared to those for used cars.

It’s high time the automobile industry stepped into the era of progressive manufacturing. To do
that we need to develop forward and backward linkages. The major challenges we face are lack
of R&D, inadequate supply of locally developed reliable components, lack of sustainable
demand and policy support and poor access to affordable financing. By overcoming these
challenges, in the future we can introduce products that will boast the “Made in Bangladesh” tag
and offer affordable mobility solutions to all customer segments.

SWOT analysis of automotive industry in Bangladesh:

Actions Required to Improve Automotive Sector after COVID-19

The global automotive industry, increasingly characterized by global mergers and relocation of
production centers to emerging developing economies, is in the grips of a global pandemic. The
industry is concerned with consumer demands for styling, safety, and comfort; and with labor
relations and manufacturing efficiency. In this context, the growth patterns, changes in
ownership structures, infrastructure, trade patterns and role of the government of Bangladesh is
crucial in the automobile sector. Following actions are needed to improve Bangladesh’s
automotive sector:
1. Government policies and support: Due to low cost of labor many foreign companies are
investing in Bangladesh. The Bangladeshi Government should add the automotive
industry to the list of its core or “pillar” industries, recognizing it as a significant driver to
achieve economic growth since it had many forward and backward linkages and many
foreign manufacturing companies are thinking to shift from China. The industry should
prioritize the automotive manufacturing sector for promotion and favorable policy
support to promote productivity. The government needs to realize the development of the
passenger vehicle segment and take decisions like permitting increased foreign capital
and overseas collaborations and reduce production licenses on manufacturing operations.
Government-funded training programs and cluster building in supplier relations will
enable vendor development and sustainable supply chain management. The government
needs to remove auto import quotas and permitted 100% FDI (Foreign Direct Investment)
in the sector. The Indian car industrial policy also protected the domestic market by
setting up challenges for firms such as requirements for higher local content. This policy
helped the development of basic capabilities in manufacturing and laid foundations of the
auto component supplier industry. Vehicles are the main reason of air pollution in Dhaka
city. Mainly vehicles that run on diesel, pollutes the air in large level. In Bangladesh,
there is no single electric car charging station & the environmental awareness is not that
much. So Bangladesh Government should make policies and regulation for
manufacturing and testing electric cars in the roads.
2. Transport Infrastructure Development: In order to successfully improve infrastructure in
Bangladesh, there must be an increased commitment from the government, in addition to
foreign investments to this end. But there are some improvements needed in certain areas
which will beneficial for supply chain management of automotive industry. Challenges
faced from the transport infrastructures are:
 Railway management and train containers are not efficient enough
 Timely implementation of the ongoing infrastructure projects
 The major problem in Dhaka city is unbearable traffic congestion
 Inefficient custom offices that deals with air cargo
 Inadequate capacity of existing sea ports and lack of heavy lifting vehicles
Following actions can be taken to improve the transport infrastructure:
 Dedicated train containers and longer trucks for transporting cars from manufacturing
plant to sea ports and airport
 The mega projects such as Padma Bridge, Metro Rail, Bypass roads etc. should be
finished soon
 Custom office management should be efficient for faster delivery of components to the
manufacturing plant
3. Training Programs for Building Efficient Labor: Bangladesh has low labor cost than most
of the countries but the labors are not efficient to work at the automotive manufacturing
plants. This is a list of worker types that are needed for manufacturing cars:
1. Assemblers and Fabricators
2. Industrial Machinery Installation, Repair, and Maintenance Workers
3. Material Moving Workers
4. Machine Tool Cutting Setters and Operators
5. Machinists
6. Welding, Soldering and Brazing Machine Operators
7. Cutting, Punching, and Press Machine Setters
8. Laborers and material movers by hand
9. Tool and Die Makers
10. Molding Operators and Molding Machine Setters
11. Welding Cutters and Fitters
12. Industrial Machinery Mechanics
13. Maintenance and Repair Workers
14. Helpers
15. Construction Laborers and Extraction Occupations
16. Construction Trades Workers
17. Forming Machine Setters, Operators, and Tenders
18. Painting Workers
19. Grind, Lapping, Polishing, and Buffing Machine Operators
20. Coating, Painting, and Spraying Operators
21. Plating and Coating Operators
22. Millwrights
23. Extruding and Drawing Machine Setters
24. Metal and plastic workers
25. Crushing, Grinding, and Polishing Machine Setters, Operators, and Tenders
26. Rolling Machine Setters and Operators
27. Building Cleaning Workers
28. Plumbers, Pipefitters, and Steamfitters

Bangladesh Government should hold training programs to make efficient labors while the
manufacturing plants of the foreign companies are building. In this manner, workers will
be able to work as soon as the building of plant is complete.
Sustainable Supply Chain Management of Automotive Sector
As Bangladesh doesn’t manufacture the components that are needed to manufacture a car, we
need to improve those components from other countries such as Japan, Korea, Germany, USA,
India and so on. This will increase the cost for the time being. An overview of the SSCM is
given below:

Components that are needed to be import are:

Initially importing components will increase cost but we can develop the sub industries that will
produce these components in Bangladesh. After some foreign car manufacture companies starts
building cars in Bangladesh, we will offer the component manufacturers to build their plants in
Bangladesh so they will minimize their cost of shipping and high labor costs. These procedures
may take 5 years to fulfil but the economy of Bangladesh will get a boost from this sector. Below
a timeline of 5 years is given:

There is also one thing to notice. Electric cars are the future of automotive industry. By the year
2025, Bangladesh may produce enough electricity to plant charging station around the country or
cities where electric cars can be charged. Policies regarding the testing electric cars and
producing them should be made by then. Electric cars also need batteries which are produced by
some companies around the world. As companies are trying to shift their plant from after
COVID-19 situation, we can also propose the battery manufacturers to build their in Bangladesh
and start production.