Bangladesh set to be new hub for Indian auto companies

[Black_cats]

Bangladesh set to be new hub for Indian auto companies​

Tata Motors, Ashok Leyland, Mahindra and Bajaj Auto have stepped up their game through joint ventures and begun identifying homegrown distributor groups to assemble a major portion of their products in Bangladesh. These companies are firming up launches and ramping up capacity as they offer a very high level of customization to customers, reinforcing the product portfolio across all segments in the region, experts said.

Lijee Philip | ETAutoApril 27, 2022, 11:30 IST

HIGHLIGHTS​

• Indian auto OEMs bullish on Bangladesh
• Tata Motors, Ashok Leyland, Mahindra and Bajaj Auto step up game , through joint ventures , expanding capacity and launching new products
• Emission standards in Bangladesh also lag behind those in India and other developed nations
• Auto OEMs find it easier to service customers in Bangladesh, as its an India like market

As Sri Lanka is engulfed with its economic crisis, the new destination for Indian auto companies seems to be Bangladesh that is on the brink of a major economic boom, spurring auto majors to look eastwards.

“We actively support our distribution partners through local manufacturing, financing and go- to- market operations”, added Sharma.

Tata Motors is the largest commercial vehicle brand, including small & heavy CVs and buses in Bangladesh with a two-third share. “It continues to invest in Bangladesh in developing a suitable product portfolio to serve our customers, building a wide network of sales & services, and expanding our CKD assembly facility in Jessore”, said a TAMO spokesperson.

Indian auto OEMs have focused on building their presence in the South Asian, African and Middle Eastern markets over the last few decades. In the economic downturn caused by Covid, the Bangladesh market continued to sparkle while most others suffered, said Kaushik Narayan, CEO of Leaptrucks, a platform for the sale of trucks and buses.

Emission standards in Bangladesh also lag India’s and other developed nations. With a wide range of value for money products available in their portfolio across multiple emission standards, matching terrain and weather conditions, Indian OEMs are uniquely positioned to cater to the requirements of the Bangladesh market, Narayan said.

Indian auto OEMs are capitalising on this growth story in Bangladesh by making substantial investments in JV and assembly operations. It's an India like market, so auto OEMs find it easier to service such customers, said Kavan Mukhtar, head, auto practice, at PwC.

Mahindra Automotive, which works with the local partner Rangs Group, has established itself in the pick-up segment. In tractors, Mahindra is exploring possibilities of local assembly of some specific products which will help the Bangladesh government in their program of ‘Make in Bangladesh.’
“We are also exploring possibilities in the aggrotech space to help farmers achieve higher yields and prosperity. Mahindra has partnered with the Karnaphuli Group and Rancon Group for distribution of products”, said a Mahindra spokesperson.

Chennai-based truck major Ashok Leyland, through its channel partner IFAD Auto, sells 65% of its locally assembled Light and Medium commercial trucks and buses in Bangladesh. “The plant includes a bus body assembly facility and cab weld line, a first of its kind in Bangladesh. We shall continue to promote locally assembled products which strengthen the local economy, develop suppliers base and provide local job opportunities,” said the Ashok Leyland spokesperson.

Ashok Leyland is currently the market leader in bus and 16T (Medium and Heavy commercial vehicle MHCV) segment. "Our LCV platform, Dost, is well accepted in Bangladesh and we are looking forward to the launch of Phoenix, our new 3.5T LCV in FY23. Our 10-14T ICV platform is also gaining market share and we look to enhance its sales through added features”, he added.

Indian passenger vehicles, two and three wheelers, light trucks, buses saw an average sales growth of 15-20% in Bangladesh in the last 2-3 years despite the dominance of Japanese reconditioned vehicles.

https://auto.economictimes.indiatimes.com/amp/news/industry/bangladesh-set-to-be-new-hub-for-indian-auto-companies/91117860

 

[bluesky]

If Indian companies produce cars in BD in millions, I don't know where are the roads to run them. The above is a recent picture that shows the dismal Dhaka road system.

Indian companies are not that stupid to build car factories in BD in scores without first surveying the road/ bridge networks.

 

[Two banks of the River]

View attachment 838670

If Indian companies produce cars in BD in millions, I don't know where are the roads to run them. The above is a recent picture that shows the dismal Dhaka road system.

Indian companies are not that stupid to build car factories in BD in scores without first surveying the road/ bridge networks.

It depends on demand. If it's there, companies will setup businesses.

 

[bluesky]

It depends on demand. If it's there, companies will setup businesses.

For now, the rich people will keep on buying made in Japan used and new cars. The BD roads are full of these cars. Middle and lower classes cannot afford to purchase family cars. For them, metro rail and bus together will become the main modes of transportation.

But, regardless of bad road systems, a country needs thousands of small passenger (660 cc) and utility pickup trucks (within 1 ton capacity) as well. And the demands for these types of vehicles cannot be met by importing.

So, Indian companies may build these types of vehicles more. So, they can set up factories in BD to manufacture these items.

 

[Arulmozhi Varman]

For now, the rich people will keep on buying made in Japan used and new cars. The BD roads are full of these cars. Middle and lower classes cannot afford to purchase family cars. For them, metro rail and bus together will become the main modes of transportation.

But, regardless of bad road systems, a country needs thousands of small passenger (660 cc) and utility pickup trucks (within 1 ton capacity) as well. And the demands for these types of vehicles cannot be met by importing.

So, Indian companies may build these types of vehicles more. So, they can set up factories in BD to manufacture these items.

What you posted is the scenario of many Tier 2 and Tier 3 cities in India. Some Tier 2 cities are really good but they are rare here. But it has not stopped people from town/rural areas buying cars etc here.

 

[HydraChess]

For now, the rich people will keep on buying made in Japan used and new cars. The BD roads are full of these cars. Middle and lower classes cannot afford to purchase family cars. For them, metro rail and bus together will become the main modes of transportation.

But, regardless of bad road systems, a country needs thousands of small passenger (660 cc) and utility pickup trucks (within 1 ton capacity) as well. And the demands for these types of vehicles cannot be met by importing.

So, Indian companies may build these types of vehicles more. So, they can set up factories in BD to manufacture these items.

The articles is alluding more towards commercial vehicles. Unlike personal vehicles, buying second hand commercial vehicle never works. Too much of loss during breakdown of a vehicle.

 

[bluesky]

What you posted is the scenario of many Tier 2 and Tier 3 cities in India. Some Tier 2 cities are really good but they are rare here. But it has not stopped people from town/rural areas buying cars etc here.

In BD, all towns are congested and much of the suburbs are flood plains without a strong road infrastructures. And people need sources of incomes before they can purchase family cars.

I do not expect many BD people to go after family cars for many years in the future. However, things will keep on changing.

The passenger car uses are limited for now. It will change with time when suburban/ rural road networks are widened and strengthened.

This is why I suggested 660 cc small cars because they are cheaper. Utility vehicles are a needed component for any would be modern society. An utility vehicle has multiple uses. It will gradually replace the rickshaw and push carts.

 

[HydraChess]

In BD, all towns are congested and much of the suburbs are flood plains without a strong road infrastructures. And people need sources of incomes before they can purchase family cars.

I do not expect many BD people to go after family cars for many years in the future. However, things will keep on changing.

The passenger car uses are limited for now. It will change with time when suburban/ rural road networks are widened and strengthened.

This is why I suggested 660 cc small cars because they are cheaper. Utility vehicles are a needed component for any would be modern society. An utility vehicle has multiple uses. It will gradually replace the rickshaw and push carts.

It reminds me of Tokyo. Though most people can afford and have a car, they mostly use public transport. Simply, space is on premium on the road.

 

[Bilal9]

View attachment 838670

If Indian companies produce cars in BD in millions, I don't know where are the roads to run them. The above is a recent picture that shows the dismal Dhaka road system.

Indian companies are not that stupid to build car factories in BD in scores without first surveying the road/ bridge networks.

This is probably the worst intersection in Dhaka. It's like taking a picture of the slums in LA (skid row) and saying this is how people in USA live. Also there is construction going on. Indians are very good at managing their investments - they know what potential the market has in Bangladesh.

Buses and Trucks use the countryside mostly, which is more open than this. Take a look.

 

[bluesky]

This is probably the worst intersection in Dhaka. It's like taking a picture of the slums in LA (skid row) and saying this is how people in USA live. Also there is construction going on. Indians are very good at managing their investments - they know what potential the market has in Bangladesh.

Buses and Trucks use the countryside mostly, which is more open than this. Take a look.

Long distance trucks and buses use highways and expressways. And normal people use their vehicles for daily activities in the towns and cities. This needs a proper road system that Dhaka or Chittagong or any normal town has almost none.

Imagination itself has no value in practical business. People should visit the entire country to know how limited our infrastructure base remains. And the car manufacturer will survey everything before they start producing cars.

The picture I have shown is the real one. But, you guys think it should not be shown in the PDF because foreigners see it also. That punctures our prestige.

We better do not hide the reality. If you send two pictures of under construction highways, I can send 20,000 other pictures of broken roads clogged with rickshaw vehicles that needs emergency renovation.

Unless we understand we are 500 years behind many countries, we cannot go ahead. If everything is in order in BD, then why this talk of development? We have to accept the reality and not imaginations.

 

[Bilal9]

Long distance trucks and buses use highways and expressways. And normal people use their vehicles for daily activities in the towns and cities. This needs a proper road system that Dhaka or Chittagong or any normal town has almost none.

Imagination itself has no value in practical business. People should visit the entire country to know how limited our infrastructure base remains. And the car manufacturer will survey everything before they start producing cars.

The picture I have shown is the real one. But, you guys think it should not be shown in the PDF because foreigners see it also. That punctures our prestige.

We better do not hide the reality. If you send two pictures of under construction highways, I can send 20,000 other pictures of broken roads clogged with rickshaw vehicles that needs emergency renovation.

Unless we understand we are 500 years behind many countries, we cannot go ahead. If everything is in order in BD, then why this talk of development? We have to accept the reality and not imaginations.

You may be right - but from what I have seen from my visits to Dhaka lately, improvements in road infra have taken place.

Videos do not lie. Have you been to Dhaka lately?

Visit this guy's channel and you will see. He highlights some bad roads in Bangladesh as well.

https://www.youtube.com/channel/UCVCyBQVewNAsHqC_dhL7S-g

 

[HydraChess]

Long distance trucks and buses use highways and expressways. And normal people use their vehicles for daily activities in the towns and cities. This needs a proper road system that Dhaka or Chittagong or any normal town has almost none.

Almost all old towns have this issue. Underground or over ground metro system is a must for all dense cities. It can move lots of people very reliably at a very low cost.

 

[bluesky]

You may be right - but from what I have seen from my visits to Dhaka lately, improvements in road infra have taken place.

Videos do not lie. Have you been to Dhaka lately?

Visit this guy's channel and you will see. He highlights some bad roads in Bangladesh as well.

https://www.youtube.com/channel/UCVCyBQVewNAsHqC_dhL7S-g

Yes, the two Dhaka Mayors are doing their best to improve the road and many other infrastructures. But, a continuous effort is likely needed to change the face of Dhaka and make the road systems functional.

I personally do not believe that Dhaka can support million cars on its roads where even the traffic signal systems remain inadequate, intersections are not made properly understood, no side roads, no one-way lanes, always 90 degree angles when a lane changes directions, and Police controlling the traffic on the big roads.

Roads are still clogged with very slow Rickshaws, tricycles, vehicles and buses. Trucks are absent in day time though, and motorcycles are playing positive roles. So, Rickshaw speed regulates the speed of all other vehicles.

Therefore, removing Rickshaws from the Dhaka roads is essential. But, the govt must think of creating new source of income for them. Industrialization is necessary for that but it is not forthcoming soon.

I live in a country where I see everything so systematic, a very typical character of the Japanese. But, BD being BD, I am sure that to establish a normally functional road system will take many decades even if there are wills.

This is why I believe that Dhaka will not be a city of cars soon. But, it can be a city of motor cycles during the next one decade.

 

[satyamev]

1. Diversifying production facilities helps in overcoming trade barriers, from the domestic market as well as potential export markets.
Western car manufacturers have been beaten in the Indian market by the Japanese and koreans and Indians, and have stopped selling in India, but they are exporting components to other countries using these facilities.
2. BD has a fast economic growth and its good to get a toehold when the vehicle penetration is low. Builds familiarity and future dependence, since vehicles in the subcontinent are retained for a long time by both the private and commercial sectors.

 

[bluesky]

Buses and Trucks use the countryside mostly, which is more open than this. Take a look.

Why do you think that buses and trucks are for the rural areas only? Do you think as a few highways, have been built, therefore, all the buses and trucks will stop serving Dhaka passengers and move away to other parts?

Could you please cite one City like this in any country? You are assuming that if Indian companies manufacture cars, therefore, everyone will automatically buy one. Please wait for at least a few more decades or more than a century to let that happen, if someday it really happens.

Even with the construction of Metro Rail, Dhaka will need more and more buses to serve passengers to and from the rail stations. I hope, the Indian companies manufacture them in quantities instead of private cars.

Even there is no (coin) parking spaces. Please build them first and ask the Indians to manufacture cars. Cars need petrol that is imported with dollars. Do we have that much of dollars?