Bangladesh Tire Market Research Report: Forecast (2022-27)

Market Overview

Bangladesh’s tire industry highly depends on imports from several countries like China, India, Japan, & Indonesia, among others. It has improper infrastructure for setting up tire production facilities, unavailability of raw materials like natural rubber, lack of skilled professionals & capital investment, etc.

However, the government of Bangladesh is actively working on seeking ways to counter its dependence on the import of tires and laying out tax exemptions as opportunity areas for several leading tire manufacturers. With this, the tire market in Bangladesh shall observe both significant ups & downs in the coming years.

Market Insights

The Bangladesh Tire Market is projected to grow at a CAGR of around 2.4% during the forecast period, i.e., 2022-27. Since Bangladesh mostly relies on the import of tires & automobile components for the sustainability of its automotive sector, the tire market might witness slow growth in the coming years. It owes principally to the implementation of several policies by the Bangladesh government emphasizing the development of road infrastructure.

It shall augment the vehicle sales in the country and make a direct impact on the tire industry over the forecast years. Besides, the country's mounting demand-supply gap and its import dependence on countries like China, India, Japan, & Indonesia are generating growth opportunities for the leading players to bridge the gap & enter the tire market. 

This dependence on the import of tires & vehicle components is because the country lacks raw materials like natural rubber, native manufacturing units, skilled professionals, & prolonged political instability. Nonetheless, these scenarios are anticipated to witness a paradigm shift and propel the overall market growth in the coming years.

Key Trend in the Bangladesh Tire Market

• Growing Government Support through Policies & Encouragement for Electric Vehicle Adoption

Since the country lacks capital investment for the sustainability of the automotive & tire industry, the government is seeking measures to support the industry expansion. Hence, with a rising number of tax exemptions for tire manufacturing entwined with the increasing encouragement for the adoption of Electric Vehicles (EV), the tire industry is expanding. Moreover, norms like Automobile Industry Development Policy-2020, which aims to reach the goal of at least 15% EV registrations by 2030 as a step forward in reducing carbon emissions, are projected to boost the Bangladesh Tire Market over the coming years.

Impact of Covid-19 on the Bangladesh Tire Market

The Covid-19 pandemic had a decelerating effect on most industries, where the automotive & tire sectors of Bangladesh, which are highly import-driven, were no exception. The trade restrictions affected the supply of tires in the country, introduced massive shortages, & increased demand-supply gaps.

Consequently, price hikes for finished products like tires were the most prevalent & common challenges that rose in the country. In April 2021, leading player Goodyear mentioned that the cost of their raw materials is expected to double in the second half.

However, with the gradual improvement in the pandemic situation, the government uplifted the restrictions and allowed the recommencement of tire manufacturing operations. As a result, borders were back on the trade, and the import of tires & vehicle components started reviving gradually.

While the market was hammered in the initial phase resulting in massive demand-supply gaps, the same factors are generating growth opportunities for the leading players to enter the market & bridge the gaps, & in turn, generate revenue.

Market Segmentation

Based on Type of Vehicle:

• Passenger Car
• Light Commercial Vehicle
• Buses & Trucks
• Medium and Heavy Commercial Vehicles
• Off the Road (OTR)
• Two Wheelers
• Three Wheelers

Amongst all vehicles, Buses & Trucks are anticipated to demonstrate the fastest growth in the Bangladesh Tire Market during the forecast period. It owes principally to the growing demand for these vehicles for transportation, import-export, and logistical applications, resulting in an increasing number of trucks & buses in the country.

Additionally, since Bangladesh is highly import-driven, the burgeoning need for more trucks & buses for transportation of numerous goods drives the market. Hence, several leading players are entering the market to boost the production of tires in the country. Besides, India is amongst the prominent exporter of tires, trucks, & buses to Bangladesh, and it is presently focusing on the export of Trucks & Buses Radial (TBR) tires, which would bring an upswing for the market in the coming years.

Moreover, the government of Bangladesh procured 200 trucks from prominent vehicle company Ashok Leyland in February 2022 as a part of a project from India. The tender was for 135 fully built trucks, including 3T trucks, hydraulic beam lifter, sewerage sucker, and 65 units of truck-mounted wrecker, a specialized vehicle to be deployed by the Bangladesh Government for various highway applications.

On the other hand, Two-Wheeler vehicles dominated the Bangladesh Tire Market in recent years, and the same trend is likely to be followed during the forecast period. It owes principally to the growing sales of these vehicles among the under the low-income population due to benefits like cheaper personal transportation across the country.

Based on Type of Tire:

• Bias
• Radial

Of both, Bias tires dominated the Bangladesh Tire Market with the largest share in recent years & is anticipated to prevail the same trend during the forecast period. It attributes principally to the growing number of heavy vehicles like buses & trucks, construction equipment, etc., in the country, on account of their benefits, including multiple layers that provide enhanced grip & traction (especially while carrying load), i.e., due to plies that support the vehicle weight from treads & sidewalls.

Besides, bias tires, known for their easy flexibility and delivering a smooth ride on rough terrains, are a preferred choice among various heavy vehicle owners. Moreover, the cost-effectiveness, excellent traction at low speed, robust resistance from cuts & punctures, etc., are other prominent aspects expected to augment the demand for bias tires and fuel the overall market growth during the forecast period.

Market Dynamics:

Key Driver & Opportunity: Growing Focus of the Government to Counter Dependence from Import Goods

The Covid-19 pandemic acted as an eye-opener for the country when the disruptions in tire imports brought financial fluctuations amidst the crisis. The government of Bangladesh is actively working on improving trade relations, devising financial plans, budgets, & providing tax exemptions to minimize the reliance of the automotive & tire industries on imports from other countries.

It, in turn, would generate growth opportunities for the leading players to set up tire production units and drive the Bangladesh Tire Market during the forecast period. Moreover, the introduction of sports vehicles like Mitsubishi Pajero in the local markets of Bangladesh is another crucial aspect anticipated to boost the sales of tires & augment the overall market growth during the forecast period.

Possible Restraint: Unavailability of Raw Materials

Bangladesh is an import-driven tire market and does not have a proper setup for production houses. It lacks a strong foothold in the tire industry. The prime factors that limit tire production across the country include lack of raw materials like natural rubber, improper tire manufacturing facilities, and growing demand & supply gaps.

Key Questions Answered in the Market Research Report:

1. What are the overall statistics or estimates (Overview, Size- By Value, Forecast Numbers, Segmentation, Shares) of the Bangladesh Tire Market?
2. What are the region-wise industry size, growth drivers, and challenges?
3. What are the key innovations, opportunities, current & future trends, and regulations in the Bangladesh Tire Market?
4. Who are the key competitors, their key strengths & weaknesses, and how do they perform in the Bangladesh Tire Market based on the competitive benchmarking matrix?
5. What are the key results derived from surveys conducted during the Bangladesh Tire Market study?