Runner Automobiles is taking preparations to invest Tk 433 crore to set up an automobile assembling and manufacturing plant to grab a share of the rapidly growing commercial vehicle market.
"Equity will provide a portion of the fund and currently we are in talks with a foreign bank for the financing of the project," said Hafizur Rahman Khan, chairman of Runner Automobiles.
The Bangladeshi motorcycle manufacturer signed an agreement in this regard with Indian commercial vehicle manufacturer Eicher Motors nearly one and a half years ago for technical cooperation.
"We wanted to set up the plant by the first half of 2020, but Covid-19 delayed the whole process," said Khan.
The company primarily wanted to establish the plant inside its existing Bhaluka plant in Mymensingh. "But we had to discard the plan due to a lack of space."
Later, the company sought 40 acres of land inside Bangabandhu Sheikh Mujib Shilpa Nagar from Bangladesh Economic Zones Authority (Beza).
"We need 60 acres in total for a complete automobile facility. I hope Beza will allocate more lands for us."
The plant is expecting to create employment for around 350 people having different skills, including automobile engineers and technicians, he said.
"We will start with assembling commercial vehicles like trucks and buses of Eicher. In the next five years, we will gradually move towards manufacturing chassis and other components."
Runner is also the local distributor of light, medium and heavy duty trucks of Eicher.
The sales of commercial vehicles are increasing fast in Bangladesh with around 35 per cent of the demand for trucks being met by Eicher.
The market size of commercial vehicles grew 15 per cent to 20 per cent every year over the past decade.
Around 35,000 commercial vehicles such as buses, trucks, auto-rickshaws, cargo vans, human haulers, pickups and tankers were sold on an average since 2017, way higher than the 2,000 rate 10 years ago, according to data from Bangladesh Road Transport Authority.
At present, the market size of commercial vehicles is about Tk 4,200 crore whereas it was about Tk 2,000 crore a decade ago.
Now Rangs Motors Limited, Ifad Autos Limited and Nitol-Niloy Group are assembling commercial vehicles of Indian Mahindra and Mahindra, Ashok Leyland, and Tata respectively.
So far, Beza received investment proposals worth $23.97 billion from local and foreign businesses for different economic zones in the country.
"During the pandemic in 2020, investors expressed their willingness to invest $4.08 billion, which is a record and a very good sign for the economy," said Paban Chowdhury, executive chairman of Beza.