Runner Automobiles Ltd, the two-wheeler manufacturing pioneer in the country, has announced that it will invest Tk300 crore for manufacturing Bajaj three-wheelers in its Bhaluka, Mymensingh factory complex.
According to company officials, the project completion time is estimated at 12-15 months. The annual manufacturing capacity would be 30,000 units, which would employ 200 new people, mostly technical hands.
This will be the first manufacturing plant of any global three-wheeler brand in the country.
Runner has already begun partial assembly of the Bajaj three-wheelers at its Bhaluka factory complex.
Now the Runner-Bajaj tie up is extending to technological collaboration for progressive manufacturing and local sourcing of parts and components, according to the two group's planned agreement approved in Runner's Board meeting recently.
Runner will also distribute the said Bajaj three-wheelers – popularly called Bajaj RE 4S (Bajaj Rear Engine Four Stroke) three-wheelers – in Bangladesh.
Hafizur Rahman Khan, chairman of Runner Automobiles, said in a statement, "This is a very important and crucial step towards expanding the automobile manufacturing capabilities in Bangladesh and developing local expertise including vendors."
"This initiative of Runner Automobiles Limited is in line with the government's vision of making the light engineering sector a priority" he added.
The company's presence in the three-wheeler market will be further strengthened with the setting up of the manufacturing plant, ensuring quality, availability and affordable price, Runner said in its disclosure to shareholders.
The company will build new three-wheeler factory sheds, set up frame welding, painting, and vehicle assembling and testing facilities there.
Three-wheeler market outlook
Bangladesh three-wheeler market that had begun its journey in the late 1970s grew up to 40,000 units a year in 2017, thanks to the decade-long popularity and affordability of compressed natural gas (CNG) as an alternative fuel of gasoline or diesel.
However, business slowdown pushed the number down to 25,000-30,000 units last year, according to industry insiders' report seen by The Business Standard.
As the nation is moving away from CNG to more convenient and cleaner fuels like liquefied petroleum gas (LPG), Runner began to import LPG, diesel and gasoline-run three-wheelers made by Pune-based Bajaj Auto – the global leader in three-wheelers.
The industry intelligence report, prepared by a marketing team of a top automobile company, states that Bajaj is a more dominant brand in Bangladesh three-wheeler market.
In the combined segment of CNG and LPG-run three-wheelers around 90% are Bajaj here, of which over two-thirds are still CNG-run and are being marketed by Uttara Motors Ltd.
Indian TVS, and Italian Piaggio are the other players in the Bangladesh three-wheeler market.
The industry report predicts that LPG is likely to surpass CNG as the next fuel for three-wheelers as LPG is transportable to remote gas stations of the country and also the CNG prices are on the rise.
This would unlock the LPG-run three-wheelers' potential for replacing over a million unauthorised and unreliable electric three-wheelers across the country over the next 10 years.
LPG-run three-wheelers will constitute more than two-thirds of the total three-wheelers in the country by next 5-10 years, the report projects.
There is a huge growth potential for the local three-wheeler market, especially for non-CNG models, if the price can be brought down through localisation, said market researchers wishing anonymity.
Runner Automobiles also refused to share its specific market outlook but said local manufacture would bring down the price of three-wheelers, like it happened in the motorcycle market.
Currently, an imported three-wheeler is subject to more than 90% tax on its total import price.
The country is yet to adopt a favourable tax policy that might inspire big investments in three-wheeler manufacturing like Runner has planned.
A Runner official told The Business Standard, "We are expecting to enjoy 28% less duty burden as soon as manufacturing begins. But, the duty should be even lower for the sake of the localisation of the promising industry."