Race intensifies in bike market

Japanese auto giant Honda plans to set up a motorcycle manufacturing plant in Bangladesh to meet the growing demand in the local market.

Honda has started looking for a site for the plant, which will have an annual capacity between one lakh and two lakh units, according to a report of Nikkei Asian Review, a Japan-based business publication.  

The company, which currently assembles bikes using imported parts and accessories at a plant in Gazipur, may invest about 2 billion yen or $18.48 million in the new factory.

Honda considers setting up the plant amid prospects of accelerated infrastructure development in the country and demand growth fuelled by rising incomes, the report said.  

Japanese Prime Minister Shinzo Abe visited Bangladesh this month and indicated that his government will help the country develop industrial infrastructure such as power plants, it said.

Meanwhile, two Indian motorcycle manufacturers -- Hero MotoCorp and Bajaj Auto -- have already announced their plans to set up motorbike factories in Bangladesh by forging partnerships with local companies.

Hero MotoCorp, India's largest motorcycle maker, will set up a manufacturing plant in Jessore by 2015 in a joint venture with local Nitol Niloy Group and invest $40 million in five years. Uttara Group, Bajaj Auto's local assembler, is set to build a plant at a cost of Tk 150 crore by June next year.

Bangladesh has seen its economy expand at an annual rate of 6 percent over the past few years, while per capita income is close to $1,200 -- seen necessary for motorbikes to be widely adopted.

The market for motorbikes is expected to expand from the current two lakh units to five lakh units in fiscal 2020, the report said, adding that Honda now sells only 10,000 bikes a year in Bangladesh.

In September 2012, Honda set up a joint venture -- Bangladesh Honda Private Ltd (BHL) -- with state-run Bangladesh Steel and Engineering Corporation (BSEC).

The BHL began local assembling of the popular Honda CD80 in October last year.

Honda owns 70 percent of the BHL, while the rest is controlled by the BSEC.

Under the joint venture, a factory with a production capacity of 80,000 units a year has been set up in Gazipur with an investment of Tk 61 crore.

In fiscal 2013-14, the assemblers and manufacturers together sold around two lakh motorcycles, up from 182,764 units the previous year, according to industry people.

Bajaj, Hero, Walton, Runner, TVS and Yamaha are the leading two-wheeler brands in the country.