Honda has slashed prices of its motorcycles in Bangladesh by up to 16.5 percent after the company got duty benefit for its plan to manufacture bikes locally in the next few years.

The new price, which will be applicable to five models, became effective from yesterday, said a press release from Honda Bangladesh Private Ltd (BHL), a joint venture between Japan's Honda Motor Co Ltd and state-run Bangladesh Steel & Engineering Corporation.

From now, the price of Honda's Dream Neo, its most popular model, will be Tk 119,000, down 16.5 percent from its previous price.

The price of its CB Shine 125 model has been slashed 10 percent to Tk 146,000 each.

The announcement comes after Honda got the benefit of reduced supplementary duty on import of motorcycle in complete knocked down (CKD) form for signing up as a 'progressive manufacturer'.

As a progressive manufacturer, BHL will soon have to start making parts and machinery of motorcycles and gradually increase the proportion of local manufacturing.

Once a firm gets approval as progressive manufacturer from the ministry of industries, the supplementary duty for importing bikes in CKD form is reduced to 20 percent from 45 percent.

The National Board of Revenue offered the reduced import duty privilege to CKD motorcycles from the current fiscal year with a view to developing the local motorcycle industry.

BHL said it has submitted its stepwise localisation plan to become a progressive manufacturer and subsequently got the approval from the government.

“Since the supplementary duty has been reduced from this week, this reduction is to be reflected in the suggested retail prices, so that our motorcycles become more affordable to our customers,” said Yuichiro Ishii, managing director and chief executive of BHL.

The Japanese brand is the first motorcycle marketer to get the approval as a progressive manufacturer in Bangladesh. The market for motorcycles has been shrinking since fiscal 2011-12 owing to high import duty.

Some 150,000 units of motorcycles were sold in fiscal 2015-16, down 14.29 percent year-on-year, according to BHL.

The company said it is committed to contributing towards the growth of the motorcycle market based on its global experience.

The company also said it wants to make motorcycle a more affordable form of transportation for the masses.