Rancon Auto Industries Ltd (RAIL) has entered into a partnership with Mitsubishi Corporation to manufacture vehicles in Bangladesh for sale in domestic and regional markets.

Under the agreement, Mitsubishi Corporation will acquire a 25% equity stake in Rancon Auto, which began local production of the Mitsubishi Xpander in June 2025. Announcing the joint venture at an event held at Sheraton Dhaka, Rancon Holdings Group Managing Director Romo Rouf Chowdhury stated that the partnership would contribute to the country's automotive sector.

Amir Khosru Mahmud Chowdhury, State Minister for Civil Aviation M Rashiduzzaman Millat, and Japanese Ambassador to Bangladesh Saida Shinichi were present at the event.

Chowdhury stated, "The strategic alliance - the first of its kind in the country's automotive sector - reflects the Bangladesh-Japan trade relationship."

He further added that the investment is expected to improve access to vehicle financing, expand after-sales services, ensure spare parts availability, and strengthen distribution networks across the country.

"It will also facilitate the transfer of technology and knowledge to develop a skilled local workforce, while contributing to government revenue through VAT and taxes," Chowdhury said, adding that the company's automobile division has developed its manufacturing base since commencing operations in 2017.

Rancon Auto, which focuses on multi-brand vehicle manufacturing and assembly, began with the local assembly of the Mitsubishi Outlander. It later expanded its portfolio to include the Fuso BM117, Mercedes OF1623, Proton X70, as well as trucks and pick-ups from JAC and GMC.

The company upgraded its factory in 2023 with a paint facility. In the following year, it launched the locally painted and assembled Mitsubishi Xpander, which recorded monthly sales exceeding 100 units.

Chowdhury stated that the country's automobile market remains underdeveloped. With one of the lowest per capita vehicle ownership rates in the region and a population of approximately 200 million, Bangladesh has long-term demand potential as the middle class expands.

Against this backdrop, Rancon initiated discussions with Mitsubishi to utilise its manufacturing and distribution expertise. The discussions resulted in the joint venture, under which Mitsubishi Corporation acquired a 25% stake in Rancon Auto Industries through direct foreign investment.

Chowdhury stated that the development reflects international interest in Bangladesh's industrial sector.

He further added that it may represent the first instance of direct foreign investment in four-wheel vehicle manufacturing in the country.

Chowdhury stated that the development could encourage other global manufacturers to invest, contributing to the development of an automotive manufacturing ecosystem capable of generating employment and supporting exports. He also referred to regional examples such as Indonesia, Thailand, Malaysia, Vietnam, India, and Pakistan, which have established automotive industries with export capabilities.

Ambassador Saida Shinichi described the joint venture and acknowledged the contributions of engineers, technicians, and government officials involved in the project.

He stated that Mitsubishi had begun training Rancon engineers in 2024, followed by the launch of Xpander assembly in June last year, indicating coordination between the two sides.

The ambassador also referred to Bangladesh's efforts to improve the investment environment, including its first Economic Partnership Agreement (EPA) with Japan, signed in February, and initiatives such as the "Investment Gateway".

He noted that the Mitsubishi Xpander is currently the only locally assembled Japanese-brand vehicle in Bangladesh and described it as the country's first "made-in-Bangladesh" Japanese car. He further added that local assembly could support industrial development, including technology transfer, employment generation, and growth in upstream industries such as parts manufacturing.

Hiroyuki Egami, Senior Vice-President and Division COO of Mitsubishi Corporation, stated that the company will contribute its automotive expertise to the partnership.

In his address, Finance Minister Amir Khosru Mahmud Chowdhury described the Mitsubishi-Rancon joint venture as a development for an automobile sector that has historically depended on imported vehicles.

"Bangladesh has traditionally depended on cars imported from Japan, Europe and the United States, a pattern that had become a way of life," he said, adding that local assembly with a global brand such as Mitsubishi represents a turning point.

He stated that Rancon's experience in the automobile market makes it a suitable partner and expressed the view that the collaboration would expand.

The minister highlighted the broader economic implications of the venture, including its potential to increase value addition, create employment, and support industrial development, particularly in light engineering. He further added that the government is planning a dedicated zone for light engineering industries to support such initiatives.

At the event, State Minister M Rashiduzzaman Millat announced that direct flights between Dhaka and Tokyo will resume next month, restoring an air link between Bangladesh and Japan following a prolonged suspension. He stated that the resumption is expected to improve connectivity, facilitate trade and business, and strengthen ties between the two countries.

"Flights to Tokyo will resume next month," he said, adding that the move is expected to support bilateral engagement across multiple areas.