Honda is eyeing to gain 10 percent shares of annual car sales in the country
The Japanese car manufacturer Toyota has been ruling Bangladesh car market since 1960s.
But the market dynamics are changing as other internationally established automobile manufacturers are entering the Bangladesh car market. One of them is Honda, another Japanese automobile giant.
Honda cars have been gaining momentum as their sales rose by three times in the last four years, according to industry insiders. On the other hand, during this tenure the overall car market experienced a drop in sales.
However, the sale of SUVs is gaining market share. Honda is eyeing to gain 10 percent shares of annual car sales in the country.
Nowadays, the biggest appeal of Honda seems to be its models with spacious SUV like bodies on sedan chassis -- popularly called crossovers -- run by a 1,500-2,000 CC engine.
Toyota in Bangladesh
At least 80 percent of the cars operating in Bangladesh is by Toyota.
During its long market penetration, Toyota rose to fame due to quality, durability, reliability and most importantly affordability.
In addition, the increasing demand of the cars has also resulted in establishing a spare parts, servicing and repairing ecosystem, dedicated to Toyota.
The automobile giant has also contributed in turning mechanics experts in repairing Toyota vehicles.
But, with the new market dynamics the story has begun to change.
Growth of Honda
Currently, Honda seems to be breathing down the neck of Toyota in terms of attracting car lovers, looking for excitement within a budget.
Registration and sales data compiled by several car marketing teams suggest that Honda has been the fastest growing affordable brand in the Bangladesh car market in the last five years.
Honda had only a 3 percent share in the Bangladesh car market in 2016, which has grown significantly in the last four years to 8 percent.
However, in the last four years Toyota's total market share including brand new and reconditioned cars went down from over 80 percent to around 77 percent.
The rest of the 15 percent market is shared by all other brands, of which none has secured a consistent sales growth alongside a considerable annual unit sale.
Looks like, Honda has filled in whatever market share Toyota has lost.
Marketers also see a rise of Honda in the decades-old empire of Toyota.
Talking to The Business Standard, Honda's official distributor in Bangladesh DHS Motors Ltd said seven or eight years ago they were selling less than 50 cars a year.
DHS Motors underwent a transformation after its ownership changed in 2011.
The new management brushed off fears that Honda buyers will find it difficult to find spare parts and mechanic if the car broke down.
"We invested heavily in spare parts, service centres and above all customer experience. It helped us to fight the fear of not finding affordable spare parts and services afterwards," said Md Arman Rashid, general manager of DHS Motors.
"As official Honda seller, our service centres cannot compromise with cheaper aftermarket spare parts because we want to ensure quality and safety," he added.
"We are selling over 500 cars a year now, while reconditioned market dealerships are selling around 1,500 Honda cars annually.
Arman said that Honda is very serious to see success in Bangladesh.
"In 2019, the country's car market slumped but we still had steady growth," Arman told The Business Standard.
Bangladesh government imposes import duty depending on engine displacement: which means the bigger the engine, the higher the import duty rate.
In recent years, Honda focused on technologies that produce more power and torque output from a smaller engine. For instance, The 1500 CC Honda CRV has a turbocharged engine, which intakes additional air and fuel flow into the combustion chamber during drives and produces up to over 40 percent more output than traditional engines.
Turbocharged engines give Honda the technological and strategic edge.
Arman Rashid said that the first official hybrid car in Bangladesh was sold by DHS Motors, and those cars are also attracting more buyers.
Crossovers have appealing exterior, interior, and driving experience at a price slightly higher than the popular sedans, but way lower than big engine sports utility vehicles.
It is increasingly being treated as the best value for money to an expanding group of buyers who are looking for these category of cars within their reach.
Juicy service warranties are also driving buyers to Honda's doors. "We are selling cars with up to three years of service warranty," Arman Rashid said.
Toyota's global drive for no more boring cars
On the other hand, Toyota's new leadership is determined not to design any "boring car". They are thriving in the arena of research and development to make more exciting vehicles without leaving its old edges behind.
Toyota New Global Architecture (TNGA) program is expected keep the car making giant ahead in the coming decades, said Md Lutful Kabir, a Toyota marketer at Navana Ltd – the official distributor of Toyota since 1964.
The market is increasingly looking for excitements and augmented benefits. Many successful brands are coming forward with their unique selling points and value propositions.