More than half a dozen of firms are establishing facilities to assemble and manufacture two-wheelers in Bangladesh. Till now Runner Motors and Walton is the local motorcycle manufacturer in Bangladesh. Apart from that motorcycle industry is dominated mostly by Indian motorcycle brands.
Growing middle-class pie
Reduction in supplementary duty on motorcycle parts import has reduced overall cost of manufacturing motorcycle, cutting down the price of locally manufactured motorcycles in Bangladesh.
Popularity of ride sharing apps.
Government policy to increase manufacturing of motorcycle in Bangladesh to 5 lac by 2021 and doubling in by 2027.
Lack of vendor development for manufacturing required components and supply of those to manufacturers
High cost of registration
Not adequate financing options for motorcycle by FIs. Although of late, BRAC Bank and City Bank started giving out bank loans
Indian brands are real threat for local manufacturers because Indian brands hold lions’ share of the market
As purchasing power of our country is improved, people are more getting into purchasing transportation of their own
Pathao, Uber, Shohoz, Obhai and other relevant service apps are making bike more acceptable to mass
Financial institution are initiating new products to finance motorcycle
As manufacturing cost of motorcycle is reduced and demand growing fast, foreign brands have a strong motive to establish plant in Bangladesh which will allow customers to have quality motorcycle with lower price.
Amid Sakif Khan
Director, Marketing, Runner Group of Company
Can you briefly share the important events that helped Runner Automobiles reach this peak?
The motorbike industry was already there and it was growing. Products from China, Japan and India were dominant in the industry. All the companies further improved their product quality. The companies exceled based on the economic growth of our country. For example, Indian companies would want to establish a regional office in Bangladesh and start selling their products and they already have a manufacturing plant in India. Runner was assembling motorbikes in the early stage in the year 2000. We started manufacturing motorbikes realizing the country’s growth as well the industry. As economy of Bangladesh is growing, it needs mobility to keep up the pace. We wanted to manufacture motorbikes locally and make it affordable for mass people so that mobility takes less cost and saves the time. This is how our manufacturing operation started and now we started exporting to some neighboring countries.
Bangladesh’s GPD and export are increasing and dependency on import is decreasing. We had a technical support collaboration with a Chinese company, ‘Dayang’ for the initial setup but now our company also collaboratively workes with Indian, Korean, Chinese and other companies in the automotive industry. Runner has the capacity of producing 500 motorbikes in a day. In the facility we produce fuel tank, frame body, stands, handles etc. and source others such as, plastic components, seats, chains from local vendors who manufactures these components locally, electric components from different countries. As a manufacturer we make our design source components based on the designs. Automobile industry came into scalability when people’s purchasing power was increasing. For instance, we see a lot of luxury cars on the street which reflect the spending behavior of people.
We analyzed the growth trend of the country and came up with the visionary plan of manufacturing motorbikes locally. Motorbike market size in Bangladesh is about 500,000 bikes. We expect that it would increase this year as the political situation is stable now.
In midst of the flocks of Indian and Chinese bikes, how Runner, being a Bangladeshi manufacturer, ensures quality of the bikes?
When we started manufacturing, we ensured we have quality control and after sales service. We test our components both serially and randomly in our plant. If the components fail to meet the benchmark, we discard them and halt the shipment of those components. We give our feedback to the vendors so that they can improve the quality of the components. This is how we ensure quality control.
What is the philosophy of Runner automobiles in case of positioning the brand in the market? How do you differentiate Runner from its competitors? What is your USP?
We have focused on affordability and comfortability first, then comes features of the bikes. Pricing of the bike depends on the features it has and people have a very subjective views on quality. For example, a person may find Maruti car very practical, whereas the other person may find BMW cars are over featured. So, as a manufacturer we cannot define quality; it rather depends on the perception and affordability of individuals. The pricing also differs due to import duties on bikes and its components. Customers will exercise their purchasing power more if the product is affordable. Runner’s automobile first enabled customers to purchase motorbikes in installment. After that, other companies in the industry followed the trend. Recently, we have convinced the banks to finance motorbikes like car loans. We make customers dream about owning bikes and we are designing our products accordingly. We cater our products to the market based on customers’ need. Our bike ranges from BDT 60,000- BDT 260,000. Our company mostly generates revenue from 80cc and few premium bikes. For example, we would recommend a Pathao bike rider to purchase a 100cc double rider bike with more power, ‘Runner Bullet’ on the same note ‘Kite Plus’ is a unisex product for the trendy young people which has a radio and USB hub in it. We always try to come up with new features and we further improve those features based on the market feedback.
What is your marketing strategy?
Our first strength is that we are a Bangladeshi brand. We carry our nation’s flag where ever we are stepping in. As a Bangladeshi automotive brand, we are focusing more on this area to make all people believe that this is our nations product but not from other countries. So, brand building by several ATV and BTL activities are there nationwide. E.g. Runner is with cricket. We are the associate partners of Bangladesh cricket team for the home series. Other than that, we are with BPL, Rajshahi Kings, our brand ambassador is Shakib Al Hasan, one of the icons of Bangladesh. One of our strengths is to give totally customized products for the corporate customers. Other core strength is our distribution channel. We have around 300 showrooms and over 150 dealers all over the country. These showrooms are our marketing hub.
What is the current demand of Bike due traffic situation in Bangladesh?
Demand of the bike has increased after Uber & Pathao have introduced ride sharing app in Dhaka city but overall the industry for bikes are growing. In Bangladesh, 100cc bike has the biggest segment. Yamaha and Suzuki cater the racing segment. Hero and Bajaj serve both commuter and racing segment. Runner is no different than those companies; however, it caters the customers with affordable bikes. Runner is focused on serving quality products with affordable pricing. We have servicing center 1.5 times more than the showrooms we have all over the country. We provide genuine services and components within the affordability of the customers. We could make it possible due to favorable government policies for the manufacturers.
What are your activities when it comes to giving customers a superior experience?
We constantly learn from the feedback of our customers. We try to improve our services accordingly. We approach our customers warmly so that they can experience a great service from us.
The demand of bikes in Bangladesh is very high. Due to heavy traffic in Dhaka city and easy movement, people are preferring bikes than any other mode of transportations. As the infrastructure of the country is growing, the need for transportation is also increasing. The increased purchasing power of the people are influencing them to have their own private transportation in affordable pricing.
Of late, Runner went through few important events: Going for IPO, starting export to Nepal. What are your future initiatives for expansion and capture the market?
The investment we have got from capital market will be used for R & D of the company. It will help us to improve our product quality and expansion. Since the year 2000, we are manufacturing two wheelers. We are expecting that we will experience an upward growth against the foreign competitors. We also want to further improve the quality of the product and services we cater. Currently we are manufacturing two wheelers and expect to manufacture three wheelers in near future. As the automobile industry is mostly dependent on technology we expect that, our graduates from engineering background would contribute to the country’s development. We also have a vision to manufacture four wheelers.
How would you opine about the growth of Bangladeshi motor cycle market?
The sustainability is very difficult in this industry. Many companies emerged with good products and faded away with the time. Bangladeshi RMG has a huge market worldwide and we aspire to reach that level as automobile manufacturer. The government’s policy is proved very favorable for the motorbike manufacturers. We got the approval to manufacture up to 500cc bikes locally for the export market. So far we have only worked up to 150 cc bikes and manufacturing, 180cc, 200cc, 250cc, 300cc and 500 cc bikes are the next steps for us. We are customizing our products according to the climate of the countries we want to export. So far government has supported us immensely. We expect that government would continue helping us to expand the industry. A collective support can only make an industry successful.
Although being a 20-years old market in Bangladesh financial sector, Suppply Chain Finance is yet to produce desired yield ascribing to some reasons. Firstly, there is a lack of understanding about the concept of supply chain finance and its products despite its immense potential in Bangladesh market. Corporate entities show indifference in backing up their suppliers, which is why suppliers have to take the fund at high rate. Also, here in case of non-payment of corporates, the supplier becomes delinquent to the banks, which is an unusual scenario in otherwise traditional loan products.
Reverse factoring, which is broadly applied in other parts of the world, has yet to get broader acceptability in Bangladesh market. However, the most crucial challenge is, supply chain finance is yet to be recognized as “a separate product” at regulatory level. It is still treated under the policy of Short Term Revolving Loan. However, some commendable initiatives such as Digital Supply Chain Finance Platform is taking place in the local market that breaths fresh air in this innovative product category. Also, there is a talk in the industry about the policy-making in regulatory level which will be the big push for this mode of financing.