How is South Asian Automotive Market Positioned?
Asian countries vary greatly in
terms of automobile manufacturing and market demand. It includes Bangladesh
which is the third largest automotive market in Asia.
The countries that we have
considered in this research are Nepal, Bhutan, Bangladesh and Sri Lanka. Except
Bangladesh, all the countries are heavily reliant on the import of automotive
vehicles. Most popular means of transport is two wheeler in these countries
since it is easy to transport and will be more affordable than four wheelers,
except Sri Lanka. Out of the Heavy weight vehicles, ambulance are most popular,
followed by Buses and Trucks. Pre-COVID, Bangladesh saw the Automotive Industry
growing as a result of its government schemes.
Market: The automotive Industry has seen significant growth
in the last few years, recording a CAGR of ~% during 2016-2020 primarily due to
strong economic growth, increased consumer spending, increased consumer and
business confidence in the economy and affirmative government policies.
Apart from these factors, other
indirect factors have played a major role as well, like condition of public
transport, geography and terrains of the countries, accessibility to micro-chip
manufacturing centres and trade agreements that have facilitated strong growth
and increased sales in units.
By Type of
Vehicle: 70% of the vehicle consists of
two wheelers in the country as they are more affordable and easy to replace
along with they fit fairly well with geography and terrain of Nepal. With
pandemic, there was a massive increase in sales for 2 wheelers as people were
hesitant to travel in any mode of public transport.
While two-wheelers recorded encouraging sales when the lockdown was lifted, the
same wasn’t the case for four-wheelers. Unlike two-wheelers, buying a
four-wheeler—the least expensive of which cost two million rupees—in Nepal is a
high-value investment.
By Region
(Zone): Bagmati and Lumbini are the
leading regions in Nepal representing lion’s share of sales in Automotive
Industry. In 2019, the country was hit with a nationwide lockdown due to COVID
and this was implemented in the peak sales season..
Bhutan has witnessed a massive
increase in the sales of cars in the past 5 years. Estimates say that now there
is one car for every 7 people in Bhutan. However, Bhutan has always been well
known for its efforts to attain complete sustainable development. Keeping these
goals in mind, the country is pushing towards EVs or electric vehicles. It aims
to become a hub for electric vehicles. To discourage the use of vehicles
(pre-COVID) in order to keep in track with the happiness index (which the
Bhutanese prioritise), the government also increased taxes on vehicles.
However, car buyers were not discouraged from obtaining loads and hence
financing this purchase was easy.
Power tillers are a highly
growing segment in Bhutan with a CAGR of 14% for 2020-2025. It is the sign of
the growing agriculture in the country. Another leading segment is the light
weight vehicles.
Sri Lanka is an import based
country when it comes to automotive. The decline in the automotive sales
started when there was a terrorist attack on the country which was followed by
a ban on imports to save the much needed foreign exchange. To make matters
worse, the government revised and increased the excise duty for automotive
vehicles in Sri Lanka which slowed down the imports. The ban took a toll on the
entire market as this ban was imposed at a time where public transport was not
convenient and there was a demand for two wheelers.
Companies have been selling
vehicles from their inventory but they do not have any inventory to sell after
2020. Many small dealerships have shut shop during this period as they did not
have enough inventory to stay in business and this has also led to massive
unemployment.
By OEM : We have divided this segmentation into two
sections, one for motor cars and the other for motorcycles. The most popular
OEMs in two wheeler segment are Indian companies whereas in the four wheeler
segment it is the Japanese that take the largest share.
With a population of 167 million
people and an annual GDP growth averaging over 7% in the last five years, and
high remittance from expatriates, Bangladesh represents one of the World’s Top
5 emerging economy for the next decade. Despite doubled in the last five years,
the per capita income is still among the lowest in the World (US$1.829 in the
2019), but it is projected to double within the next five years. Pre-COVID,
Bangladesh saw the Automotive Industry grow as a result of its government
schemes. There was a decrease in automotive taxes which led to an increase in
mobility and sales. Similar to other countries, sales were down during the year
2019-2020, owing to COVID. However, post the lifting of lockdown, Bangladesh
saw a rise in the demand for 2 wheelers as public transport was not convenient
for everyone and the most affordable option in the market was a 2 wheeler. The
government has been very supportive of the industry and has schemes in place to
promote the industry in a post-COVID world.
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Nepal Bhutan Sri Lanka and Bangladesh Automotive
Market Future Outlook and Projections
Nepal Bhutan Sri Lanka and
Bangladesh Automotive Market is expected to increase at a CAGR of double digit
during 2021 to 2026 basis volume. After the pandemic there will be a push and
rebound growth in the manufacturing sector of the country and consumer demand
rebound in the countries, pushing the growth. There will be a boast in various
low share segments like Taxi and Power Tillers due to rebound of the commercial
activities in country. Government Policies and taxation policies provide a
foundational support for the growth of this industry.
Key Factors
Considered in the Report
- Nepal Bhutan Sri Lanka and Bangladesh
Automotive Sales Volume
- Nepal Bhutan Sri Lanka and Bangladesh
Automotive Vehicle Type (in Units)
- Nepal Bhutan Sri Lanka and Bangladesh Automotive
Vehicle Type (Market Share)
- Nepal Automotive Vehicle Registration by
Region
- Nepal Vehicle Registration by State
- Nepal Bhutan Sri Lanka and Bangladesh
Automotive Maker Market Share
- Future Market Size and Segmentations,
2020-2025F
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Ankur Gupta, Head Marketing &
Communications
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