Motorcycle and Parts

One of the fastest growing industry in Bangladesh, the booming motorcycle market has drawn global firms to set up assembly plants in Bangladesh

Motorcycle industry has emerged as one of the fastest growing industries in Bangladesh, witnessing impressive growth for the last several years. Motorcycle offers an alternative and cheaper mode of transportation to the large population of Bangladesh with increasing purchasing power. As a result, the market of motorcycles in Bangladesh has been expanding rapidly. Today more than 1,000 units of motorcycle are sold daily. Annual local registration of motorcycle stood over 400,000 units in 2019, growing at the rate of 35% per annum since 2014. There was a slight fall in demand due to Covid19 in 2020 with total registered vehicles falling to 3110,000. However, the market is expected to grow back soon.

Overview

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More than 1000 motorcycles are sold daily

Number of motorcycles tripled over a period of five years

In 2020, over 80 percent of vehicles sold were two wheelers

Market Size

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Compounded Annual Growth (2014-2020)

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Penetration ratio

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LEED certified green garment factories

Bangladesh

Advantages of Bangladesh

The demand for motorcycles is expected to continue growing rapidly in Bangladesh.

Low penetration ratio of 19 per 1,000 population indicates potential for further growth.
Growing middle-income population: Sustained economic growth over the last decade has enhanced consumers’ purchasing power and affordability, leading to the rise in demand for consumer durables. According to the Boston Consulting Group, 30 to 40 million people will join entry-level middle-income class by 2025, while another 34 million will move to a higher middle-income bracket, enabling them to reach a higher standard of living.
Rising popularity of ride sharing and ecommerce and consequently logistics/home delivery service industry
Motorcycle provides quicker mode of transport in the traffic laden Dhaka city.

Motorcycle manufacturing

Government is encouraging manufacturing of motorcycles. Current assemblers are encouraged to progressively shift to manufacturing through duty reductions on import of raw materials.

Parts & component

The Government of Bangladesh is encouraging investment in parts and components manufacturing. The linkage formation is one of the key agendas of the National motorcycle policy 2018. In addition, there are tax incentives for manufacturing of part and components.

Incentives Related To Motorcycle And Parts Industries

Reduced corporate income tax of 5% for local manufactures of motorcycles till June 2021 and 10% from July 2021-June 2032.
10-year exemption of corporate income tax for newly established industries engaged in manufacturing of parts and components produced by light engineering industry used in industries (effective from July 1, 2021-June 30, 2030) (SRO 166/Law/Income Tax/2021)
Cash incentive of 10% is provided for export of motorcycle.
Related SROs
- SRO Order (SRO 155/2016/17) which defines the progressive manufacturers and allows duty reduction on their imported parts/ materials
- SRO (155/2017/41) which defines the local (category-1) manufacturers and allow duty reduction or exemption on their imported parts/ materials (also to the parts suppliers)
- SRO (207/2018/810) which allows VAT exemption to local manufacturers and parts suppliers on their imported parts/materials
- SRO (69/2019/05) which redefines the progressive (termed as category-2) manufacturers and duty exemption on their imported parts
- Related Policy
  Motorcycle development policy 2018