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Bangladesh crisis causes major losses to Indian auto manufacturers
Industry News- Aug 09,24
Data from the Ministry of Commerce and Industry shows that Indian two-wheeler exports to Bangladesh were 3.6% by value in FY24, down from 3.69% in FY23 and 3.72% in FY22.
Indian exports of two-wheelers, trucks, and buses to Bangladesh are expected to be significantly affected this month due to escalating civil unrest in the neighbouring country. Data from the Ministry of Commerce and Industry shows that Indian two-wheeler exports to Bangladesh were 3.6% by value in FY24, down from 3.69% in FY23 and 3.72% in FY22.
Factories in Bangladesh have been closed for the past three days amid the crisis, further impacting trade. Bajaj Auto, India’s leading exporter of two- and three-wheelers, ships approximately 3.6% of its monthly exports to Bangladesh. Hero MotoCorp, which generates 20-30% of its sales outside India from Bangladesh, also faces disruptions.
Both companies have manufacturing facilities in Bangladesh to comply with local regulations and reduce customs duties. Hero MotoCorp operates a joint venture plant in Jessore, while TVS Motor partners with T V Sundram Iyenger & Sons.
Rakesh Sharma, Executive Director, Bajaj Auto, stated, “Bangladesh is a crucial market for us. We export 5,000 to 6,000 units per month, and we hope the situation improves soon.”
In FY24, Indian two-wheeler exports to Bangladesh made up 3.6% of the total, with Bajaj Auto and Hero MotoCorp holding significant market shares in the country’s annual two-wheeler market of 450,000-500,000 units. Bajaj Auto leads with a 20-23% market share, while Hero MotoCorp holds 15-16% and sells about 60,000 units annually.
Bangladesh is also a key market for Indian commercial vehicle manufacturers like Tata Motors, Ashok Leyland, and Eicher Motors. However, commercial vehicle exports to Bangladesh have struggled to recover since the pre-Covid year of 2018-19, falling to 6,000 units in 2023-24. Vinod Aggarwal, MD, Volvo Eicher Commercial Vehicles, noted, “Exports had bottomed out but were on the brink of recovery.”
While some companies like Maruti Suzuki India report minimal impact due to their diversified export markets, the overall share of Bangladesh in India's auto exports has been declining post-pandemic. In 2023-24, India exported $175 million worth of automobiles to Bangladesh, a decrease from $223.68 million the previous year and $333.95 million in the year before that.
(ET)
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