• Automobile industry is one of the growing sectors in Bangladesh.

Compared
to the last decade, the growth of the automobile industry has gradually
increased due to the socio-economic development and purchasing power
of the middle and upper middle class of the country. According to
BRTA data, the number of passenger car vehicles increased at a 5.43% CAGR
rate from 2011-2020.
• However, compared to other Asian countries, the passenger car
penetration is still very low in Bangladesh. There are only 2.5 car owners
per 1000 population. In Malayasia, 897 people among 1000 individuals
owned a car. In Myanmar, about 129 people out of 1000 own a car.
• Higher tax rate on automobiles, inadequate and narrow national highways,
high traffic density, high price of fuels, higher interest rate on private
vehicle financing are responsible for the lower number of car owners in
Bangladesh. Due to the covid-19 pandemic, sales of automobiles declined
to its lowest in 7 years.
Overview of Industry

 The use of motorized vehicles has increased significantly in the last 2 decades (2000-2020). According to The Daily
Star, There were only 303,215 units of registered motorized vehicles in 2003 in Bangladesh. But up to MAY 2021,
According to BRTA data, there were 4,729,393 units of registered vehicles in Bangladesh. Among them, 544,616 are
passenger cars.

 The automobile market is again dominated by sedan cars, covering almost 68% of that passenger car market. The
Remaining 12.40% are covered by Sports utility vehicles (SUVs) and 19.27% are covered by microbus. Due to the
increase in purchasing power, mass people are buying vehicles more than ever before.

 Although cars are not yet manufactured in Bangladesh, many companies, both public and private, have been
assembling cars.

 The first automobile assembly operation was started in 1966, by ‘Pragati Industries Limited’. They were operating through a
joint venture with the government.
 Apart from that, some local private automobile assembling companies are operating in Bangladesh including IFAD Autos Ltd,
Aftab Automobiles, Fair Technology Limited, Bangladesh Auto Industries Limited, Bangladesh Machine Tools Factory, Bangla
Cars, Niloy-Hero Motors, PHP Automobiles, Pragoti Industries Limited, Runner Automobiles and Uttara Motors Limited.
 But locally assembled cars haven’t gained much attraction in the market so far. In 2020, among the new registered cars, 82% are
reconditioned 16% are brand new imported, and only 2% are locally assembled vehicles.
Motor Vehicle Registered: Bangladesh: Total from 1995
to 2022 in the chart:
In less than a decade, the two-wheeler market in
Bangladesh grew more than three times. During this
period the source of supply shifted from the imports to
the local manufacturing which accounts for more than
90% of the units sold here annually.
Following the Motorcycle Industry Development Policy
2018, the government now is working to finalise the
Automobile Industry Development Policy 2020, the
draft of which is drawing mixed reaction since that
contains a plan to phase out imports of reconditioned
vehicles in five years and Bangladesh car market is
mostly made of reconditioned Japanese cars due to
their perceived reliability and a wide range of models
from the top Japanese car brands.
However, even before the policy is finalised, some top
local groups including Uttara Motors, Ifad, Runner,
GPH, in collaboration with their foreign technological
partners, have proposed to invest nearly Tk3,000 crore
in total to invest in Bangabandhu Sheikh Mujib Shilpa
Nagar in Chattogram alone as the emerging industrial
park offers a suitable package for automobile investors.
Growth of Honda
Currently, Honda seems to be breathing
down the neck of Toyota in terms of
attracting car lovers, looking for excitement
within a budget.
Registration and sales data compiled by
several car marketing teams suggest that
Honda has been the fastest growing
affordable brand in the Bangladesh car
market in the last five years.
• BEZA(Bangladesh Economic Zones Authority) social specialist (consultant) Md Abdul Quader
Khan said BSMSN( Bangabandhu Sheikh Mujib Shilpanagar) will be the automobile industry
hub of Bangladesh. The development work of the 30,000-acre Shilpa Nagar is proceeding fast.
• “Our land allotment has been completed. We confirmed $22 billion in investment. Hundreds
of thousands of Bangladeshis will get jobs here in the future,” he said.
• Quader said ACI, BAIL, Star Alliance, Uttara Motors and IFAD Autos Ltd will invest in the EV
manufacturing plant. Discussion with Walton is in the final stage. The plant will employ some
10,000 people.
• “Uttara Motors will invest $33 million (for producing EVs and spare parts). Star Alliance will
invest $88.23 million, Mango Teleservices Ltd $100 million and IFAD $51 million,” Quader told
The Business Post.
• Runner Automobiles Limited’s Chief Financial Officer Shanat Datta said they would invest in
EVs at BSMSN.“We will assemble EVs in joint venture with Volvo car of India. We are currently
studying the market and waiting for land allotment at BSMSN,” he told The Business Post.
• BAIL Chairman Mannan Khan said “We will produce global standard lithium-ion batteries that
can be used for 7-8 years in the EVs and another 4-5 years at solar power plants or for backup.
They will be recycled after that,” he said.
• But he did not say anything on how long it would take to fully charge the batteries. Mannan
said that EVs produced by them can be charged at homes and refuelling stations. Around 10
to 15 cars can be recharged at a time at a commercial refuelling station, he noted.
• “The cost per kilometre will be Tk 1-1.5 for our EVs but going the same distance will cost a
traditional car Tk 12-13,” he said.
• He said that the low operation cost and environment-friendliness of the cars will attract
customers despite the possible high prices.
• Mannan claimed that they “plan to produce 30,000 cars in the first year” and “double the
number after one year”. “We will think about export after meeting domestic demand,” he
said.
• The EVs will cost between Tk 8 lakh and Tk 13 lakh. A top end vehicle will have a range of up
to 350 kilometres, he claimed.
PROTON PHP
Current Trends In Market
 Increasing Demand for Brand New Cars. The Japanese reconditioned cars are
dominating the automobile market of Bangladesh for a long time. But, currently the demand
for Japanese reconditioned cars is slowly declining. In 2016, reconditioned cars almost
covered 92% of the demand, and in 2020, it decreased to 82% of the automobile industry in
Bangladesh. The tax difference between reconditioned Japanese cars and brand new cars
became minimal.
 Sports Utility Vehicle (SUV) Obtaining Popularity. SUVs or JEEPs were always
present in the Bangladeshi market. But their use was limited within the government officials
and important corporate personnels. In recent years, following the global trend, SUVs are
becoming popular among family buyers too. SUVs provide better driving comfort in
Bangladeshi road conditions as well as high ground clearances. The sportier look of SUV’s
attracts the younger generation as well.

 Increasing Demand for Hybrid Vehicles. Hybrid vehicles in the Bangladeshi

market are growing at a significant rate. Toyota Axio, Honda Grace, Nissan X-trail are some of
the popular hybrid vehicle brands in Bangladesh. Due to lower tax rates on Hybrid vehicles
compared to gasoline fueled vehicles, they are gaining popularity among the buyers. All car
brands are planning to bring EV cars in future also.
Automobile industry development policy 2020
Vision: To emerge as a leading sector in the country with substantial
contribution to national economy for manufacturing of automobiles and
automobile components with output reaching 10% of the GDP by 2030.
Mission: Develop an automotive production base with strong domestic supply
chains for modern, competitive and viable automobile and auto-parts industry
by 2030 through:
• New investment measures;
• Tariff rationalisation;
• Rationalisation of Import Policy;
• Establishment of infrastructure for Quality, Safety, and Environmental
Standards;
• Ensure consumer welfare, and
• Establishment of Bangladesh Automotive Institute.
 OBJECTIVES
The overall objective of this policy is to provide the domestic industry with opportunities to achieve
competitiveness in manufacturing and engineering of automotive products. The specific objectives of the
National Automotive Industry Development Policy 2020 are to:-
i. Enhance value addition. The policy promotes local manufacture of automotive products that meet the
standards and specifications of Original Equipment Manufacturers (OEMs). This will provide opportunities
for Joint ventures with global value chain players to produce affordable brands and models in Bangladesh.
ii. Increase contribution to GDP. To support the growth of the automotive industry in Bangladesh for both
domestic and export consumption, thereby becoming a significant 10% GDP contributor of the
manufacturing sector by 2030, with an initial impact realized by 2025.
iii. Enhanced market access. To scale-up local production for import substitution and increase exports of
automotive products to SAARC and Middle East region.
iv. Skills development and job creation. To create a dynamic skill development eco-system and establish
Bangladesh as a manufacturing skills centre of excellence. This focuses on quantitative and qualitative
improvements in skills to ensure competitiveness and build a solid foundation for direct and indirect job
creation in the automotive sector, over the next decade.
v. Enhance innovation, Research and Development. To give a supportive environment for Innovation, R&D in
the automotive sector for local design and engineering that includes developing and acquisition of
disruptive technologies.
 STRATEGIES TO DEVELOP AUTOMOBILE INDUSTRY
• Strategy 1: Promotion and Development of Local Assembly
• Strategy:2 Development of Automobile Market
• Strategy 3: Development and Promotion of Local Parts/ Components Production
• Strategy 4: Used Car Import Phased out Plan
• Strategy-5: Strengthening of Vehicle Registration and Inspection (Fitness Test)
System
• Strategy 6: Promotion of R&D and Development of Design/ Testing
• Strategy 7. Formulation (Harmonization) and Enforcement of Automobile
Standards (safety, quality, emission, etc)
• Strategy 8: Development of Industrial Human Resources
• Strategy 9: Improvement of investment/Business Climate