Strong bike industry inspires component makers
Buoyed by the government policy aimed at developing the motorcycle industry, local companies are gradually making a foray into the component manufacturing segment with a view to cutting the country's reliance on imports.
The motorcycle industry needs more than 700 components to manufacture a bike. The local light engineering industry can make four components, namely drive chain, seat, stand, and battery.
At first glance, the achievement might seem like nothing compared to the vast requirement. But producing the components locally is a major stride compared to a decade ago when the industry had completely relied on imports to meet the demand.
At least four companies manufacture components in Bangladesh, and one of them is QVC Bangladesh.
Located in Sundarban union in Dinajpur sadar upazila, the company produces around 2.5 lakh drive chains every year against the capacity of about 5 lakh.
ATM Shamsuzzaman, managing director of QVC Bangladesh, started making drive chains in 2014 after seeing the potential of the bike market. He invested around Tk 35 crore to set up the factory, which employs around 200 people.
"My company is unable to fulfil the demand despite running the factory round the clock. Users appreciate the quality of our product," he noted.
QVC Bangladesh supplies drive chains to Grameen Motors, Runner Automobiles, and state-run Atlas Bangladesh.
It meets around 60 per cent of the demand for drive chains of Runner Automobiles.
Officials from Honda, TVS, and Hero have visited his factory and inspected the quality of the product, Shamsuzzaman said, adding that he was optimistic about becoming a supplier of the companies.
Md Tazul Islam, president of the Automobile Components & Accessories Manufacturers Association, said Bangladesh could manufacture all motorcycle components as local vendors had all the resources.
Islam is the managing director of Run Industries, which manufactures motorcycle seats.
Set up at Sibrampur in Faridpur in 2009, the company is the sole seating solution provider to Runner Automobiles and Hero Motorcycle.
It sells more than two lakh seats to Runner and Hero combined. The factory has an annual production capacity of 18 lakh seats.
Local firms could not provide any official data on the annual market size of bike components or spare parts.
The annual demand is worth no less than Tk 500 crore and the market has been growing around 15 per cent per annum for the last 10 years, they said.
The growing demand for the two-wheelers and the Motorcycle Industry Development Policy 2018 has inspired local firms to set up manufacturing facilities or assembly plants to keep prices lower and capture the market share.
Currently, 96 per cent of motorcycles running in the country have either been locally manufactured or assembled.
Around 5 lakh units of motorcycles were sold in 2019. The sales declined to 3.11 lakh units in 2020 as demand fell because of the impacts of the economic slowdown caused by the coronavirus pandemic.
"Local component makers are trying to cater to the motorcycle industry amid challenges," said Hafizur Rahman Khan, chairman of Runner Automobiles, the pioneer in motorcycle manufacturing in Bangladesh.
OBSTACLE FOR LOCAL VENDOR DEVELOPMENT
The government has extended tax facilities to encourage the bike industry to develop local vendors to create world-class products for the local and export markets and to create jobs.
But not a single motorcycle company is working to develop local vendors to produce parts and components. Motorcycle assemblers import finished and semi-finished goods.
WHAT MOTORCYCLE MANUFACTURERS SAY
Khan of Runner Automobiles said policy support was needed to develop local vendors. "Runner is trying to develop local vendors."
Abdul Matlub Ahmad, chairman of Nitol Niloy Group, which assembles Hero-branded motorcycles, said all manufacturers should cooperate with local vendors in the greater interest of the industry.
Shah Muhammad Ashequr Rahman, head of finance and commercial at Bangladesh Honda Pvt Ltd, said manufacturing generated the most robust backward linkages industry through vendors across all sectors of the economy.
He noted the expansion of the motorcycle industry might encourage the growth of the parts component and supporting industries and technical consulting services.
He said the technology transfer was highly required to develop local suppliers. Sound policies and facilities were needed for local suppliers and vendors to produce parts.
"Local manufacturers may be able to offer good quality products at a reasonable price," Rahman added.
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