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Dhaka Tribune

‘Honda will contribute to the development of the local manufacturing industry’

Update : 22 Mar 2018, 10:26 PM

How does Honda see itself in the global market?

Honda is vastly popular in the world as a mass-production automobile assembly line with a main line that incorporates a flowing cell production system. It started its business in 1948 in Japan with motorcycles, which changed the life of the people drastically because of the ease of movement compared to bicycles and public transportation. The main activity of the company is the manufacture and assembly of motorcycles, scooters, and other motor vehicles and related accessories. They also carry out distribution, marketing, sales, promotion, and providing after-sales maintenance services for the “Honda” brand and other affiliated brands of Honda Motor Company Limited, Japan. In the last year, Honda brought joy to over 30 million customers worldwide with its motorcycles, automobiles, power products and jet businesses. In this fiscal year, 19 million new two-wheeler customers across 120 nations will enjoy mobility with Honda.

When did Honda begin its business in Bangladesh?

Honda began its business from 1966, but we began full fledged activity in 1972 following the independence of Bangladesh, with Bangladesh Steel and Engineering Corp (BSEC) – a subsidiary of the Ministry of Industry – as Honda’s authorized distributor. After the separation from HERO in 2010 in India, Honda decided to invest by itself and established Honda Bangladesh with the BSEC as its partner from December 2012. We started to produce bikes in a rented factory in Gazipur district from October 2013. Our investment was Tk610 million, of which 70% was provided by Honda Motor Co Ltd and 30% by Bangladesh Steel and Engineering Corporation.

Last year, you announced you would set up a motorcycle factory in Bangladesh. Tell us about your market plan?

As our sales increase day by day, we would like to extend our market and provide our quality products to customers. For this reason, we are going to launch a new factory located in the Abdul Monem Economic Zone of Char Baushia under Gazaria upazila in Munshiganj. 100,000 units per year will be produced from the 25 acre area. We hope that we can begin production from the second half of 2018.

What benefits will Bangladeshis get if you manufacture here?

Excellent question! The motorcycle business alone contributes to around two-thirds of Honda’s global business volume. I also realize that Bangladeshi people have difficulties with daily commuting, I believe people can change or improve their lives by using Honda motorcycles.

How much of the raw materials required are you bringing from abroad to build motorcycles here?

We maintain the quality of our products for customers across the world. We import quality parts from several different countries. We bring 95% of our parts from countries like India, Pakistan, Indonesia, Thailand, and Vietnam – countries in which the motorcycle market sees sales of 2-18 million units per annum. However, in order to be price competitive, the amount of local raw materials will increase when the local market volume increases.

What makes your bike different from others?

Being the number one motorcycle maker in the world, people support our products because of the build quality, excellent mileage, and international standard design.  Honda has always striven to strengthen its core values and improve its brand image.

What is the market demand for Honda bikes?

Fortunately, the demand for Honda products is high and Honda’s sales volume in Bangladesh is increasing every year.  To cope with the increasing demand, we are going to begin manufacturing in a new factory in the latter half of the year. As the first step, the factory will have a production capacity of 100,000 per annum.  After that, we plan to expand the capacity sequentially to 200,000 units per year by 2021 depending on market trends. We sold 1,000, 5,000, 9,000, 10,000, and 30,000 units in 2013, 2014, 2015, 2016, and 2017, respectively. I think it is safe to say that our market demand is increasing day by day.

Which products are more in demand here and why?

In mid-February, we launched a new street sports bike – the CB Hornet 160R – and it has become the hot model in the market because of its styling and performance. Though we supplied around 1,500 units in the first month, it is still in high demand and this has exceeded our expectations.  We appreciate the customers’ patience and hope to fulfil the demand by increasing our supply as planned.

Tell us about your market potential in Bangladesh?

From Honda’s global experience, the increase in population as well as economic growth makes the market potential for Bangladesh very high. However, due to the high import duties in the past, the market size was very low in past years. This is one of the reasons why Honda decided to build a new motorcycle production factory – to promote localization in line with the government’s policy (SRO155/2017) and to increase the amount of sales and production for a rapidly expanding market. Our total industry volume was around 230,000 units in the market in the 2016 fiscal year (April 2016 to Mar 2017). We expect to make it around 400,000 units in the market in 2017 (April 2017 to Mar 2018).

Do you have any plan to export Honda bikes made in Bangladesh?

We have no plans to export locally manufactured units right now. For now, we would like to hold the country’s one lakh customers. However, we will think about the matter in the future.

How many Bangladeshi people will get job opportunities at your company?

We expect to have 400 associates when we commence production in 2018. (cf. 200 associates as of the end of March 2018).  These 400 employees are just for the beginning, and when production increases in the near future we will employ more than 1,000 people.

Will producing Honda locally reduce the price?

When the supplement duties were reduced from 45 to 20% in December 2016, our prices were reduced accordingly.  Since we expect the import duty amounts will be reduced again when we start local production, the reduction will be reflected in our prices and our products will be more affordable to our customers.

What is your future plan?

The Honda global vision for 2030 states: “Serve people worldwide with the joy of expanding their life’s potential” and “Lead the advancement of mobility and enable people everywhere in the world to improve their daily lives”. Honda’s strength is in our ability to offer products and services filled with passion and present quality and technology to customers that are ahead of the times. Therefore, we expect that BHPL will contribute to the development of the nation by developing the local manufacturing industry and spreading the Honda global experience by improving the mobility of the daily commuting masses. We have also organized a three-day exhibition to showcase our new products at the International Convention City Bashundhara (ICCB) from March 22 to 24.
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