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The Financial Express
Swasti Lankabangla Swasti Lankabangla

Motorbike business revives shaking off pandemic sloth

Commuters buying the vehicle to avoid mass transport


| Updated: September 16, 2020 10:54:45


- File photo - File photo

Motorbike business in the country, after facing a setback following spread of the Covid-19 pandemic, has started picking up again since June due to resumption of normal traffic and other economic activities, sector insiders have said.

They said the first three months of the pandemic - March, April and May - were quite frightening for the motorbike industry. But it started reviving in the later months, following a buying spree of people, who want to avoid public transport amid the pandemic.

Consequently, the two-wheeler assemblers and manufacturers changed their previous projection of counting a huge loss, thanks to the country's gradual economic recovery.

"Sales of motorbikes are still not dynamic like the previous years. Still, we are more confident now than the past few months," said Hafizur Rahman Khan, president of Motorcycle Manufacturers and Exporters Association of Bangladesh (MMEAB).

He also said their sales were almost nil from mid-March to May, but after the government's decision to reopen economy on May 10, motorcycle showrooms have started seeing customers.

The two associations of the motorcycle assembling and manufacturing sector - MMEAB and Bangladesh Motorcycle Assemblers & Manufacturers Association (BMAMA) - on May 5 predicted a loss of Tk 6.0 billion due to reduction in sales during the pandemic.

The associations also sought an easy-term financial support worth Tk 20 billion at 4.0 per cent interest rate from the government to help protect the industry.

"During June and July, motorcycle trading became quite normal, as many conscious people bought two-wheelers to avoid public transport and maintain social distancing to keep coronavirus infection away," the MMEAB president noted.

But motorcycle sales dropped in August, particularly outside Dhaka, probably due to the flood, he added.

Mr Khan, also the chairman of Runner Automobiles, said they are still in the dark while estimating long-term loss due to the pandemic, as nobody can surely predict when it will end.

"If the second wave of the coronavirus doesn't come, local motorcycle industry will be able to regain its usual business. The country's economy has faced comparatively low impact of the pandemic than many other countries."

He mentioned that several motorbike manufacturers, which applied for assistance from the government's stimulus package, have got loans that also helped them keep their production line running.

According to the two associations, in fiscal year (FY) 2018-2019, over 500,000 units of motorcycles were sold in the country that generated over Tk 20 billion in the government revenue.

The sector invested over Tk 80 billion in last six-seven years, and created direct or indirect employment of around 200,000 people.

Talking to the FE, Biplob Kumar Roy, Chief Executive Officer (CEO) of TVS Auto Bangladesh, said: "The earlier projection of around 40 per cent negative growth for the sector proved inaccurate, which is good news for us."

Many new buyers emerged during the pandemic against the backdrop of losing usual buyers, especially in rural areas, he also said.

"It is still tough for us to say what will happen in the coming days, or whether we will be able to maintain our growth momentum, considering job loss and salary cut of so many people."

Meanwhile, Bangladesh Motor Cycle Dealers' Association President Abdul Halim said their sales had picked up across the country since June, especially in the urban areas.

"If the government reduces motorbike registration charge by at least 80 per cent, the sales will obviously improve."

Registration charge consists over 22 per cent of a motorbike's total cost, he added.

The motorcycle market started experiencing a big jump since 2015, when the government had facilitated manufacturers and assemblers with tax benefits on local production.

Currently, over 90 per cent motorcycles sold in the country are either assembled or manufactured locally.

Local market is dominated by seven brands - Japanese brands Honda, Suzuki and Yamaha, Indian Bajaj, TVS and Hero, and Runner of Bangladesh.

Besides, introduction of motorbike sharing by app-based ride-sharing services also played a key role in expanding the two-wheeler vehicle's market in the country.

According to a study of the Policy Research Institute (PRI) in 2018, the worth of ride-sharing industry in Bangladesh was estimated Tk 22 billion, and it accounted for about 23 per cent of the country's transport sector.

According to the Bangladesh Road Transport Authority (BRTA), some 138,193 motorbikes took registration till June 2020 in the country, while the number was above 200,000 in the same period of 2019 and 2018. In 2019, a total of 406,897 motorbikes took registration, while the number was 395,603 in 2018.

ahb_mcj2009@yahoo.com

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