Honda to rev up motorcycle output in Bangladesh

By Takeshi Suga

DHAKA, NNA – Honda Motor Co. plans to boost production and sales of motorcycles in Bangladesh by opening its own factory near Dhaka by the end of this year, replacing its existing rented facility, a senior company official told NNA.

Honda’s local subsidiary will double annual production from an initial 100,000 to 200,000 by 2021, Yuichiro Ishii, chief executive of Bangladesh Honda Private Ltd. (BHL), said in a recent interview.

The automaker will also expand its dealerships by 50% to 120 shops by March 2019, to increase its market share in the emerging South Asian economy now dominated by three Indian carmakers, Bajaj Auto Ltd., TVS Motor Co. and Hero MotoCorp Ltd.

TOP MARKET SHARE

“Pursuant to our position as the world’s top producer (of motorcycles), we are aiming for the largest share in sales (in Bangladesh),” Ishii said.

Last year, Honda sold 28,169 motorcycles, more than double its sales on year, in Bangladesh, which has a market of 367,800 units, BHL data showed.

In the first six months of this year, Honda’s sales doubled from a year earlier to 24,933, with its market share rising to about 11% of the total 236,700, up from 8% last year.

In August, the top three carmakers, all Indian, captured a combined share of 75%. Bajaj came in first with 33% share, followed by TVS with 22% and Hero at 20%.

In response to the growing number of women riders in Bangladesh, Honda in July began importing from India its Dio scooter.

Currently, Honda produces six models of motorcycle in Bangladesh, including CD 80 and Dream Neo 110, at a rented factory in Gazipur, north of Dhaka, which will be closed when the new factory on a 100,000-square-meter lot opens at the Abdul Monem Economic Zone, about 45 kilometers south of the capital.

STUMBLING BLOCKS

For a smooth increase in production, Ishii sees two major issues – cargo handling capacity at the key Chittagong port is not catching up with the country’s high economic growth and chronic traffic jams on the trunk road connecting the port and the capital are slowing the delivery of parts to the factory.

The Bangladesh economy has been growing at a high annual pace of 7% in recent years and is projected by the Asian Development Bank to expand by 7.9% this year.

Its per-capita GDP is estimated at $1,677, sufficient to expect a further growth in the motorcycle market.

However, its 45% import duty is keeping the prices of motorcycles about 2.5 times higher than those in India.

Honda’s local subsidiary has won government approval for a lower 20% duty by locally producing swing arms and frames. The lower rate is applied if carmakers produce at least one of the five parts in Bangladesh: swing arms, wheels, fuel tanks, handlebars and mufflers.