Padma Bridge: A $500m boost to commercial vehicle market
The Padma Bridge is expected to create demand for thousands of commercial vehicles worth at least $500 million in the next five years.
A leading commercial vehicle company's insight reveals that the industry expects to sell nearly 700 large buses this year alone, to new and existing fleet owners, targeting several dozen direct highway routes between the capital and the south-western Bangladesh connected by the Padma Bridge.
The routes will keep adding 15% of the annual average or 400-500 buses in each of the next five years, as projected in the company's internal report.
Keep updated, follow The Business Standard's Google news channel
"Around 3,000 large buses, estimated to be worth nearly Tk2,500 crore, are expected to be sold in five years because of the Padma Bridge," said a top executive of the company, seeking anonymity as he is not allowed to share his market research publicly.
Expressways and the Padma Bridge have radically improved connectivity between the capital and 19 south-western districts under Dhaka, Khulna and Barisal divisions.
The 8-10-hour bus trips between the farthest south-western districts and Dhaka are set to be shortened to 4-6 hours once the Padma Bridge opens to traffic on 25 June.
People will certainly love the quicker and hassle-free bus journey, and keeping this factor in mind, the transport industry has already booked at least 200 new large buses, targeting highway routes, said Abdul Matlub Ahmad, chairman of Nitol Motors Ltd, the assembler and sole distributor of Tata commercial vehicles.
"Understandably, the immediate investment is being observed in the bus segment," said Ahmad, who is also President of Bangladesh Automobile Assemblers and Manufacturers Association (BAAMA), "because it is the people who will prefer quicker trips most."
Gradually, though, the districts beyond the Padma Bridge will see more cargo trips as the bridge will have multiple impacts on the economy of south-western Bangladesh, he added.
Taskeen Ahmed, director of Ifad Automobiles, the assembler and sole distributor of Ashok Leyland commercial vehicles, said immediate investment in bus fleets could have been much higher if lockdowns, inflation and rising dollar prices had not hurt their finances and confidence.
His company has seen a 30% growth in bus sales in the first five months of 2022 and at least two-thirds of the increased demand is anticipated to have been related to routes connected by the Padma Bridge.
After the highway link, commodity transport from the south-western districts to the capital, especially perishable goods, will see a jump. It will create a demand for small trucks and pickup vans.
Ifad is also preparing to sell more pickups in the coming days.
Abdul Matlub Ahmad said the biggest revolution that southwestern Bangladesh awaits is industrialisation.
With gas supplies through the pipeline, Khulna division is likely to emerge as the next hotspot for industrialisation in the country, while greater Faridpur and Barisal also will see an expansion of industries following the connectivity process coming into place.
Thousands of trucks and pickups will join the existing fleets later in the coming years, he said.
The Padma Bridge also will make Dhaka-Benapole cargo trips convenient and faster.
Today or tomorrow, the Padma Bridge will boost sales of commercial cargo vehicles, said Matlub, adding that if the anticipated economic development takes place in the southwestern Bangladesh, commercial cargo vehicles might outsell the passenger commercial vehicle segment in terms of units, and in terms of value it might not be much less than the bus segment.
Buses need high additional investment for the body and interior on top of the core chassis to be built, while cargo vehicles cost much less.
The industry players' estimate looks to be over Tk4,500 crore from bus-truck-pickup sales being added in five years by the country's largest ever bridge alone.
