Paradigm shift in the Autombile Industry of Bangladesh

Publish: 4:43 PM, November 5, 2023 | Update: 4:43 PM, November 5, 2023

MD Shiyan Sadik : One of Bangladesh’s fastest-growing industries is the automobile sector. Due to the country’s socioeconomic progress and the middle and higher middle classes’ improved purchasing power, the vehicle sector has grown more steadily over the past ten years, positioning it as South Asia’s third-largest market.

For a considerable amount of time, Japanese reconditioned vehicles from companies like Toyota, Mitsubishi, and Nissan have dominated Bangladesh’s automobile industry. Japanese automobiles were attractive because of their reputation for longevity, quality, and fuel economy. Automobiles made for the Japanese domestic market were designed to meet the country’s government rules for fuel efficiency, performance, and high build quality, allowing Japanese people to use automobiles for an extended period of time. As a result, cars designed for the Japanese domestic market continued to perform admirably on Bangladeshi roads even after being driven on the roads of Japan for an elongated time period.These cars were preferred by corporations, government organizations, and private customers because of their durability and high resale value.

Nevertheless, the manipulation of auction sheets is a challenge when acquiring JDM automobiles in Bangladesh. Fraudulent techniques include manipulating the exterior and interior ratings and lowering the odometer mileage reading to cover up any unintentional history of the car, altering the entertainment system, safety module, tool kit, tires, and other original components. Car importer syndicates used to maintain a hefty number of deceitful activities which included a tie-up with showroom owners.  Also, data manipulation regarding the accident history of the purchased vehicle is very common. It is typically possible to verify car auction sheets on a number of places on the internet. However, many people struggle to locate reliable sources. These factors gradually stepped down the brand image of the Japanese automobile market in Bangladesh.

Also, at present time, the market for Japanese used automobiles is gradually contracting from a fiscal perspective. Presently, “NBR” levies taxes on reconditioned cars based on their base value rather than their diminished second-hand worth, which drives up the car’s true cost. This has enforced an entitlement towards using brand-new cars rather than focusing on reconditioned cars. Also, the emergence of the Chinese market with plentiful upgraded options at a very sustainable price is the new criteria for modifying the preferences of customers.

Chinese companies with a reputation for affordability and viable pricing, such as MG, Haval, and DFSK, made their debut in the Bangladeshi market. These manufacturers promoted their automobiles as being more reasonable than many Japanese models, and they frequently positioned themselves as providing good value for money. In contrast to expensive JDM vehicles, Chinese brands provided a selection of SUVs and sedans that were tailored to different market niches. The society’s narrative of affording an SUV is considered to be a milestone of aristocracy in Bangladesh. This has been significantly capitalized by the Chinese companies as they have meticulously introduced a wide array of mini-SUVs at an affordable price which can be considered as tough competition for Toyota or Mitsubishi SUVs.

A rising number of Bangladeshi consumers were drawn to Chinese brands because of their affordability and competitive pricing, as well as the launch of hybrid electric vehicles (HEVs) and zero-mileage alternatives. The fuel use of Hybrids is an eye-catcher compared with the regular fuel combustion engines.

The widespread use of hybrid vehicles in this region will likely result in a significant shift in the energy balance. By emphasizing the production of power rather than importing fuels, it will ease the economic strain on the country. The implementation of electronic and hybrid car models might potentially reduce the nation’s dependency on fossil fuels while maintaining low power generation costs. Therefore, Bangladesh’s adoption of hybrid cars will guarantee appropriate power utilization. Chinese companies fostered their recent investment plans by popularizing the hybrid concept in Bangladesh. Aligning with the sustainable ecofriendly transportation model that has been globally adopted, Bangladesh is also making a paradigm shift which has been reinforced by the availability and affordability of several Chinese brands.

For the Chinese car brands, features had been a major game-changer. In most of the recently released designs on the market, they have heavily integrated automated functions. Furthermore, the majority of Japanese cars imported into Bangladesh are thought to have a less athletic and paler body form. Conversely, Chinese automakers such as MG, Haval, and Cherry put a lot of effort into developing sports car models with far more intricate and streamlined designs. Every model’s interior has been upgraded, allowing it to compete with luxury brands like Mercedes, Audi, and so forth. Due to the substantial R&D expenditures made by numerous Chinese automakers, their vehicles are now highly sophisticated technologically. This includes amenities like cutting-edge safety devices, infotainment touchscreens, and electric or hybrid drivetrains. Modern safety features like multiple airbags, stability control, anti-lock brakes, and accident-avoidance systems are becoming more and more common in Chinese automobiles.

In contrast to well-known companies, some customers have complained about issues with build quality, materials, and durability. There have been substantial issues regarding the newly modified electric systems of several brands. For Chinese auto brands, the quality of after-sales care and the availability of replacement components can vary depending on the location. When maintenance or repairs are required, buyers can face challenges. There is a lack of expert mechanics in Bangladesh who can fix such problems. Also, the market of spare parts is still very much confined to certain dealers which makes the price of parts comparatively higher than other brands.  The resale value of Chinese cars may be impacted by their tendency to depreciate more quickly than certain other brands which is an important factor. When attempting to sell their Chinese vehicles in the used automobile market, buyers could run into difficulties.

In a nutshell, a paradigm shift is evident and it has started. Now, whether it is going to be sustained like Japanese cars- it is yet to be opinionated. But there is a silver lining that people are slowly shifting their choice pattern towards Chinese brands which might open a door for further investments. Recently, China has shown an interest in establishing an electric vehicle assembling industry in Bangladesh. This joint collaboration has a big possibility of shifting the imports of Japanese cars to popularizing local cars in domestic markets like India. Several policies are also on the way to facilitate such initiatives by the government. The Japanese monopoly might see the ultimate paradigm shift where chines brands or Korean brands will implicate a competitive market for consumers focusing on the new trend of electric vehicles within the next 5 years.

MD Shiyan Sadik is Lecturer, Department of Environmental Science and Management, North South University