Vehicle sales are set to boom over the next five years as middle class spending capacity rises with the expanding economy, a study has found.
The study also attributed the pick up in used car sales in Bangladesh to the reasonable tax structure and improved communication infrastructure in the country.
According to a study of the Bangladesh automobile industry by Carmudi, an online marketplace for used and new cars, Bangladesh’s growing economy and the increased purchasing power of the middle class was driving increased spending on non-essential goods like cars.
Carmudi’s global team put together the report compiling information and data from sources such as the World Bank, Freedom House Report, Nielsen and McKinsey while coordinating with the local team to gather information on the Bangladesh market.
The report said with improved road infrastructure and greater household purchasing power in Bangladesh, used car sales were set to accelerate over the next five years.
“Bangladesh is among the leading importers of reconditioned cars. The motorcycle still remains the dominant vehicle type in Bangladesh,” it said.
According to Carmudi’s Car Dealer Survey, around 40% of car dealers saw no change, 30% saw an increase in sales and the remaining 30% saw a decrease in car sales during the past year that was hit by political turmoil.
“Right now the condition is more stable than last year and the market has become very competitive,” said Khaan M Saakib Us Salehin, head of marketing at the automotive division of RANGS Group.
He said: “If the current tax structure remains the same, good quality small car sales will increase.”
The Carmudi Car Buyer Survey found that the internet was widely used to purchase cars as 70% respondents said online platforms were highly influential in their decision making.
For the purpose of buying an automobile, 20% of respondents said internet searches were their main tool and 10% listed dealer websites as a major influencer in their purchases.
Carmudi said Bangladeshi car dealers were becoming increasingly digitised when it came to reaching their buyers.
It found that 70% of car dealers in the country focused on reaching their customers through online classified advertisements.
Car dealers in Bangladesh were starting to become aware of the potential uses of social media, with 20% reporting that they were currently using social media, the report said.
The Carmudi report said even with the shift to online marketing, car dealers in Bangladesh were still comfortable with advertising through newspapers with 40% reporting that they still focused on newspapers.
Facebook, arguably the most popular social media platform, was used by over 50% of car dealers in Bangladesh to advertise their listings, according to the study.
Car dealers have not started using dealer sites, Twitter or Instagram for advertising purposes, the study said.
Businesses and households in Bangladesh were no longer limited to the physical presence of a store to exchange goods and services, the report noted.
They, too, enjoyed the benefits of virtual shopping malls. A study by the Boston Consulting Group and Telenor said by 2020, there would be 18 million internet subscribers in Bangladesh.
Approximately 32% of households will have at least one subscription and business adoption will be around 66%.
Ahmed Nafiz Naihan, executive director of Progress Motors, said the market was slowly recuperating from the negative periods of January and February when many showrooms could not open due to political instability, demonstrations and riots.
Joao Pedro Principe, country manager of Carmudi Bangladesh, said: “The automobile industry in Bangladesh is undoubtedly the most invigorating and dynamic one I have ever encountered!”
“Motorcycle sales are skyrocketing, with over 300,000 units sold in 2014 alone.
“New players are coming to the market every month, in pursuit of this fascinating market, and some are taking it by assault,” he said.