Automobile Industry, an Industry of Future Panorama Prosanta Laskar

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Bangladesh is rapidly advancing towards a strong economic platform. Today’s Bangladesh is no more a country of bottomless basket. Purchase ability of mass people have increased. The economy is expanding and the population size is also increasing at a faster rate in Bangladesh. The growth in urban population as well as the increase in economic activities has created a huge demand for different types of motorized vehicles. The demand ranges from luxury inter-district buses to small sedans. As our country is not manufacturing any type of motorized vehicles, it is totally dependent on imported ones. Our vehicle market is being dominated by imports from Japan, Korea and India. India has started to increase its local market share in recent years.

Every year Bangladesh is importing a huge number of vehicles, a large portion of our automobile market are controlled by recondition car. In this case, we import those cars mostly from Japan as the Japanese do not use cars for many years due to environmental cause. Having no demand in the domestic market, these used cars are sold to Bangladeshi car dealers. The cause of concern in this regard is environmental degradation at the cost of hard earned foreign exchange of the country.

Bangladesh is advancing too fast in some heavy machinery but we still much not develop in automobile sector. There is huge demand of automobile vehicles in Bangladesh fulfilling the demand of 17 core people. There are some companies in Bangladesh who assemble some foreign brands but they are still out of the plan of fully manufacturing. Nevertheless some of our local companies undertakes initiatives to produce private commercial vehicles. This is definitely a good step. But currently we’ve to fully depend on importing. The problem with reconditioned or used cars is pollution. Old cars pollute the environment at a higher rate and they also consume more fuel compared to new cars. Wastage of imported fuel is another loss for the country. Most of the industrialized and semi-industrialized nations have developed their own automobile industry. Initially, these countries focused on meeting the domestic demand and later started exporting automobiles.

India restricted importing cars and encouraged its citizens to use the Ambassador car. From the prime minister of the country to the general people only one brand of car was used instead of foreign-made attractive sedans. Although wealthy Indians were capable of using and maintaining high-class expensive foreign cars, they used the not so attractive Ambassador cars for some decades, just to promote their automobile industry. Everybody now can see the changed scenario of the Indian auto industry. Now, the Indian auto industry is capable of competing with other automobile manufacturing countries of the world. Gradually, they have allowed some auto manufacturers of Europe and America to assemble automobiles in India which is not posing any threat to the Indian automakers.

Another economic giant China started manufacturing automobiles of a very limited category. It has emerged as an automobile exporting county within three decades. China is moving very fast in the sector because of high demand for vehicles in South Asia including its fast expanding domestic market for low-cost cars. China’s cheap production cost and vast domestic and the South Asian market has enabled it reach a respectable position among the automobile manufacturing countries.

Regarding auto-industry, getting spare parts is a problem. At present the problem is being solved by the Dholaikhal old auto-parts sellers. But in some cases, locally produced duplicate parts are being sold to the people as new imported parts of brand-name companies. Interestingly, the quality of those parts is very close to the original ones. So, if a local manufacturer is there, subcontracting of spare parts is assured, and on the other hand, it will allow the small manufacturers to supply those parts legally.

The situation clearly shows that there is a bright prospect for developing an automobile industry in the country. What the government needs to do is to design a plan for a national flag carrier automobile manufacturing industry. Initially, it can restrict imported cars for official purposes only. On the private sector use, the government should impose restrictions on loans by commercial banks for purchasing imported cars instead of local cars. There is also a need for tax incentives to promote the locally produced cars.

The State of Global Car Sales

Global automotive sales for 2015 are expected to reach close to $89M, a 2.4% growth from 2014. Emerging markets’ share of global sales will rise from 50% in 2012 to 60% by 2020, while their share of global profits is also set to rise by 10%. When it comes to new cars, purchase intent is strongest in Asia, where 65% of respondents say they will buy new cars in the next two years, compared with 7% who plan to buy used cars.

Changes in Bangladesh Car Sales

The Carmudi study found that around 40% of car dealers in Bangladesh saw no change, and the remaining 60% were equally split, with 30% reporting seeing an increase and 30% reporting seeing a decrease in sales. According to Khaan M. Saakib Us Salehin from RANGS Group and Ahmed Nafiz Naihan from progress Motors, this phenomenon occurred due to high stock, more fierce competition between dealers, and the political instability in the country.

The Shift to Online

Bangladesh has entered a big transition by using both offline and online media. Facebook, arguably the most popular social media platform, is used by over 50% of car dealers in Bangladesh to advertise their listings. Even with the shift to online, 50% car dealers are still majorly focusing on newspapers.

The Future of Car Sales in Bangladesh

As one of the fastest growing and most promising economies in Asia-Pacific according to the Euromonitor International, Bangladesh’s economic outlook is highly promising with an anticipated real annual GDP growth at 7% on average until 2018. With improving road infrastructure and greater household purchasing power in Bangladesh, used car sales are set to accelerate over the next five years. “Car sales will grow significantly only when the tax rate will be in a tolerable state. If the current tax structure remains same the good quality small cars sale will increase”, said Khaan M. Saakib Us Salehin, Marketing Head of the Automotive Division from RANGS Group.

João Pedro Príncipe, Country Manager of Carmudi Bangladesh said, “The automobile industry in Bangladesh is undoubtedly the most invigorating and dynamic one I have ever encountered! Motorcycle sales are skyrocketing, with over 300,000 units sold in 2014 alone. New players are coming to the market every month, in pursuit of this fascinating market, and some are taking the market by assault. Regarding cars, Toyota (especially with the reconditioned models Axio, Allion and Premio) is the undefeated champion. However, it will be exciting to see how long this will last, since I know from secure sources new European brands are arriving in the market this year, at very competitive prices and with irrefusable conditions. The unpredictable of the market for the next couple of years regarding models’ and brands’ trends is unavoidable. However, one thing is certain – Carmudi will play an increasingly important role in vehicle trade in Bangladesh, especially as more models become available and vehicle buyers need to find a secure, trusted way to compare information and specifications to make smart purchasing decisions, tailored to their requirements.”

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