Over the next ten years, various factors will determine how the automotive market in Bangladesh will grow. Larive group partners LightCastle predict that the industry will increase annually to 34K units in 2025, representing an 11.2% CAGR.
Many brands who took part in the interview rely heavily on public sector purchases for annual sales. The annual sales of the car industry are significantly impacted by purchases made by and for the public sector, whether for public projects, transportation for government officials, or through different low-interest loan facilities offered to (high-level) government officials.
An increase in qualification for the special low financing to include mid-level government personnel can assist the entire automobile industry. The draught automobile policy’s objective to restrict government procurement to exclusively locally-produced automobiles can boost assemblers.
Because of the nation’s ongoing economic expansion, disposable incomes are increasing, and more families are moving up the economic ladder.
The need for automobiles in the divisions’ cities will also rise quickly as economic development reaches beyond the major cities like Dhaka and Chittagong. The astronomical import tariffs imposed on imported cars, whether reconditioned or brand new, significantly negatively influence the automobile industry in Bangladesh.
On the other hand, the local vehicle industry’s prospects can be greatly improved by a considerable reduction in trade tariffs for importing partially and entirely knocked-down components, as proposed by the automotive development policy.
As electric vehicles (EVs) gain commercial traction, the electricity price per unit may prove to be a key agreement. A future dominated by EVs is already hinted at in the automotive development policy and moving forward, environmental laws and tax advantages are anticipated to encourage the purchase of EVs.
However, consumers are likely to consider the variable expenses related to EV operation before purchasing. Bangladesh is concerned about the worsening air pollution, made worse by automobile emissions, which have made Dhaka one of the world’s most polluted cities.
The automotive policy addresses the requirement to retire and scrap automobiles that have reached the end of their useful lives. However, Bangladesh currently does not impose a limit on the automobile age, which allows the used vehicles (secondary) industry to thrive.
This strategy essentially maintains cars on the market for decades, hinders the expansion of the major car market, and discourages consumers from upgrading due to the exorbitantly expensive cost of new cars.
Bangladeshi roads are often narrow, frequently congested, and of low quality, although it is not believed that this hurt most consumers’ decisions to purchase cars. The poor state of the roads is a major factor in why people choose SUVs.
The government is investing heavily in constructing new roads, so it makes sense that car use will rise in the future, particularly at the divisional and regional levels. The development of EV-friendly infrastructures, such as a nationwide network of charging stations, will be essential for increasing the use of EVs.
