In the past year, commercial vehicles have had a sorry run. Together with tractors, they used to hold about 36 percent share in total automobile sales while cars and jeeps covered the rest of the pie, but during this year alone, that share has shrunk to 30 percent. The overall pie has also become a lot smaller. In FY19, total automobile sales for locally assembled vehicles fell to 298,000, down 12 percent. Considering that PAMA does not record sales for several local players and imported vehicles have nearly come to a halt, (up till last year, over 50,000 used vehicles were being imported), the total market size may have shrunk by a rough guestimate of 24 percent.
According to the full year PBS figures, built unit imports have declined 45 percent (cars: down 51%; LCV/HCV: down 34%) while knocked down assembling (CKD) kits saw an overall decline of 6 percent (cars: up 1%, LCV/HCV: down 15%). This CKD decline is evident in a 38 percent fall in trucks, and 13 percent in pickups. Imports for parts and accessories also fell by 15 percent. Government’s policies to curb luxury imports through regulatory duties and other restrictions may have yielded the required results, though the reducing demand for commercial vehicles is a tell-tale sign for an economy that is cooling down.
As earlier opined: “Trade activity in the economy has shrunk by nearly 9 percent which is a major demand driver; while dwindling retail demand together with falling infrastructure and construction needs have also put a dampener on commercial vehicles sales. Needless to say, the expectations from CPEC [that it would drive commercial demand] have quickly died down and estimates by logistic and freight forwarding companies of trucking demand going up in the range of 20,000-60,000 units now seem remote and far-off”.
The leading commercial vehicle assembler Hino Pak Motors announced its quarterly results for the period of Apr-Jun witnessing a steep decline in the bottom line, slipping into losses. Revenues fell by 50 percent while net profit margin stood at negative 18 percent. That alone is a forewarning for assemblers—if demand does not recover (which is expected), the only way is down.