The country's motorcycle sales further dropped after Supplementary Duty was raised in the 2015-16 budget, industry insiders said.
The sales of motorcycles have been continuously decreasing in last five years due to higher prices, manufacturers and dealers said.
Almost all the motorbike brands in the market have increased prices by Tk 10,000 to 15,000 per piece after the 2015-16 budget added more 15 per cent Supplementary Duty on CKD motorcycle.
"We fear 20 to 30 per cent sales will be decreased due to the new SD addition from 30 per cent to 45 per cent in the budget. This has resulted in the increase of motorcycle prices by Tk.10,000 to Tk.15,000," said Ashequr Rahman, Head of Finance of Hero Honda.
"The new prices have already gone beyond customers' buying capacity in rural areas", he added.
The motorbike sales in Bangladesh have been declining since 2010 due to continuous fuel price hike, increased bike registration costs and overall economic slowdown, industry insiders identified.
The volume of sales has been decreasing continuously since the 2010-2011 financial year from 255,000 pcs to 175,000 pcs in 2014-2015.
The sales were 2,30,000 pcs in 2011-12, 2,20,000 pcs in 2012-2013 and 1,84,000 in 2013-2014.
President of Bangladesh Motorcycle Assemblers and Manufacturers Association Matiur Rahman said it is a matter of great frustration for the industry that having the world's one of the densely-populated country, the present market is for less than 200,000 units.
For increasing SD in the budget, the total tax impact of motorcycle assembling industry has become 131 per cent. The impact of 131 per cent on CKD motorcycle is equivalent to the taxation level of a luxury car of 1500CC.
"How can it be justified?" he asked.
Honda Managing Director Yoichi Mizutani said the motorcycle user ratio in Bangladesh is very negligible compared to other Asian and South Asian countries.
He said one motorcycle is being used for every three persons in Thailand, one for four persons in Indonesia, one for every 13 persons in India and one for every 18 persons in Pakistan whereas every 300 persons use one motorcycle in Bangladesh.
"The proper and logical duty structure will help expand and flourish this assembling industry and many of the assemblers will be encouraged to convert themselves as manufacturers," he said.
Mr Yoichi Mizutani said if this tax structure remains foreign investors will have to review their decision to continue business in Bangladesh.
He said if the government reduces tax rate from 131 per cent to 65 per cent, a market for one million units will be created.
"There must be an increase in revenue earnings also after reducing tax rate which is the government's prime intention," he added.
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