According to industry sources, around Tk 2.5 billion new investments have been made in the automobile industry in the past two and a half years since the formulation of the Automobile Industry Development Policy 2021.
He added that the amount could have reached Taka 5 billion had it not been for the negative impact of the Russia-Ukraine war on the global economy.
According to the policy, two-wheeler manufacturers, along with three-wheeler and four-wheeler assemblers, have been given reduced import duties on raw materials, but electric vehicle (EV) manufacturers have not been able to benefit from this, it added.
South Korean carmaker Hyundai and Malaysia’s Proton are among the investors, along with local companies such as Runner Group and Bangladesh Auto Industries (Vail).
Investments are planned from at least six other four-wheeler manufacturers, including South Korea’s Kia Motors.
Runner Automobiles has already invested Tk 300 million in its bid to become the country’s first three-wheeler manufacturer.
Hafizur Rahman Khan, chairman of Lanna Group, said, “This policy has opened a window for investors and there is great potential to attract investment into this sector.”
He said the policy had special provisions for electric vehicles (EVs) and believed investors were keen to finance EV manufacturing in Bangladesh.
He opined that investments would have doubled in the past three years if not for the economic impact of the aftermath of the Russia-Ukraine war.
He added that Runner Group’s three-wheeler manufacturing unit is an example of what has been made possible by auto policy.
“They can be purchased at a lower price than imported tricycles,” he said. “With just one shift a day, he has the capacity to manufacture 2,500 tricycles a month.”
Meanwhile, Fairgroup has started assembling modern cars at its own factory, starting with the popular sports utility vehicles (SUVs) Creta and Creta Grand. In January of this year, the locally produced SUV Creta was launched.
Mr. Mesbahuddin, Chief Marketing Officer of Fair Group, said, “We have been able to expand our business as the government has granted us many benefits, including tax incentives and customs benefits for the import of equipment, assembly and spare parts needed for manufacturing. We have established a Hyundai manufacturing plant.” .
He announced the launch of a locally assembled Tucson SUV next week and said he would start assembling the sedan by April next year.
He added that the company will not initially build luxury sedans and will target first-time car buyers.
Mesbahuddin said Fair Group has invested about Tk 250 million and plans to increase the investment gradually.
Regarding the possibility of a manufacturing plant, he said that Bangladesh’s economic growth has increased customers’ desire for brand new cars, and that locally manufactured cars have several advantages, including being environment-friendly.
Customers are also becoming more aware of the benefits of new vehicles, with the market size of four-wheelers reaching around Tk 20,000 billion annually.
“The market will expand as Bangladesh’s economy grows, as the Bangladesh government is taking bold steps to develop the automobile industry,” he said.
Historically, the car market has been dominated by remanufactured cars, but as times change, new cars will gradually take over the market, especially since remanufactured cars are often too expensive and often come without warranties. .
Abdul Matlab Ahmad, Chairman of Nitor Niloy Group, emphasized the need for local parts manufacturers to support the development of the automobile industry. He said the government should be clear about the benefits applicable to EV manufacturers as they are a rising industry.
According to him, the “Automobile Industry Development Policy 2021” has brought many benefits to fossil fuel-based car manufacturers, but EV manufacturers and investors have been deprived of the benefits despite EVs being environmentally friendly and energy-saving. He said he received no benefits.
Vail and Bangladesh Lithium Battery Ltd (BLBL) will invest Tk 1.44 billion to set up the country’s first EV and lithium battery manufacturing plant at Bangabandhu Sheikh Mujib Shilpa Nagar in Mirsarai, Chattogram. .
“We will manufacture almost 60 percent of the vehicle’s components, including lithium-ion batteries, motors, controllers, chargers, software platforms, chassis and bodies,” he said.
The factory infrastructure has already been built and machinery is being installed.
Mir Masud Kabir, managing director of Bail Bonds, said EV manufacturers were not given any special treatment as the policy did not mention any specific facilities for EV manufacturers.
He said zero import duty on raw materials for EV manufacturers could reduce EV costs for end users in Bangladesh.