Motorcycle sales declined by 30 per cent in Bangladesh in the past two months due to higher inflationary pressures and a draft policy that makes securing a driving licence mandatory before buying two-wheelers.

According to market insiders, average monthly motorcycle sales came down to 35,000 units in the last two months from 50,000 units during normal times.

Similarly, the registration of motorcycles with the Bangladesh Road Transport Authority (BRTA) declined by 27 per cent. The monthly motorcycle registration slipped to 30,501 units, down from 42,242 units in 2022.

"Sales of motorcycles declined by 30 per cent due to the dollar price increase, the economic crisis and higher inflationary pressure," said Subrata Ranjan Das, executive director of ACI Motors, the local distributor of the Japanese brand Yamaha.

A sharp and unregulated growth of vehicles, especially motorcycles and three-wheelers, over the last few years has resulted in a spike in the number of crashes and casualties. This has led to the formulation of the draft Motorcycle Operation Guideline-2023 by the government.

As per the draft, the speed limit for bikes inside cities will be 30 kmh and bikes below 126cc would not be allowed to ply on highways. Besides, nobody will be allowed to buy a motorcycle without a driving licence.

Bike manufacturers and assemblers have formally opposed the draft.

Das said the proposed guideline has had an impact on the overall sales of motorcycles.

In Bangladesh, the purchasing power of the people has declined sharply owing to higher consumer prices for the last one year.

Inflation rose 8.78 per cent in February, breaking a five-month declining trend. It surged to a 10-year high of 9.52 per cent in August, driven by higher commodity prices in the global markets owing to the Russian-Ukraine war.

The significant increase in the US dollar price has also pushed up the price of bikes. The American greenback has strengthened by about 25 per cent against the taka in the last one year, making costlier imports in Bangladesh. 

The sales of high-end motorcycles, however, have remained the same, Das said.

Dileep Banerjee, chief executive officer of Uttara Motors Limited, the distributor of Indian motorcycle giant Bajaj, said his company's sales fell to 14,500 to 16,000 units per month in recent months.

The company clocks sales of around 22000 units per month during normal times.

"Currently, people are not considering motorcycles as an essential item," Banerjee said.

Shah Muhammad Ashequr Rahman, CEO of Bangladesh Honda Private Limited, a joint venture between Japan's Honda Motor Co and state-owned Bangladesh Steel Engineering Corporation, says the draft policy has created a negative impact in the market as people are confused about the speed limit of bikes in the city.

Sales of Honda-branded motorcycles declined by 42 per cent in the last two months. The price of motorcycles has increased by 18 per cent due to the hike in the price of the US dollar, he said.

The sales of bikes of TVS, Honda, Runner and other brands fell by 20 to 42 per cent, industry people say.

Biplob Kumar Roy, CEO of TVS Auto Bangladesh Limited, the local distributor of India's TVS Motor Company, says the bike industry has been suffering for the last eight months as sales have fallen.

The company's sales have gone down by around 40 per cent to 6,000 units per month from 10,000 units previously. It sold 8,000 units a month in 2022.

"Motorcycles have become a luxury item as higher inflationary pressures have created a burden for most households," Roy said.

ACI Motors' Das warned that the market of motorcycles would not return to normalcy until the stability in the foreign exchange market is restored.

"Rather, the price may go up if the dollar becomes costlier further," he said.

Uttara Motors' Banerjee also does not think that the motorcycle market would make a comeback this year since the economy would take time to stabilise as the war continues.