The current lukewarm growth in the commercial vehicle segment (9MFY18: 18% against an industry average of 25%) belies the optimism that is being seen in the industry otherwise. If we just take into account trucks, the growth was 27 percent in 9MFY18, but even at this rate, the segment is set to sell 11,000 units during FY18; against some 9,000 last year. That isn’t a lot compared to India, Thailand and Turkey who manufacture upwards of 500,000 LCVs a year.
The attention however, is staggering. Since the announcement of the auto policy of 2016-21; at least 12 players have emerged that either want to set up a Greenfield assembly, revive an old plant with a local partner or import their vehicles in CBU form into the country through an existing or new distributor, all in the commercial vehicle segment. Interestingly, the expectants aren’t all Chinese either. Just this month, NLC signed a MOU with Daimler AG for the possibility of bringing Mercedes Benz trucks in Pakistan through local assembly. Meanwhile, a local subsidiary of the Chinese Jiangsu Joylong Automobile announced it will be importing commercial vans and buses from China and sell them at half the current prices of these vehicles.
Before these, Hyundai Motors signed a contract to bring its Korean trucks to Pakistan. Last year in June, Swedish auto giant Scania announced it had signed a deal with Dewan to serve as a local distributor for its trucks, buses and coaches. FAW is already bringing its own and Hyundai vehicles while other Chinese players like JAC motors and Foton have also announced plans. Master Motors was awarded a Greenfield status to assemble commercial vehicles with the Chinese Chongqing Changan Automobile Limited. Daehan-Dewan has already launched Shehzore pickup after Dewan Motors was giving brownfield status. (Pickups in 9MFY18: 23%).
Besides a host of other Chinese players expressing interest, MAN Se and Volkswagen also indicated at different points last year that they intended to set up assembly plants in Pakistan. True, many of these good intentions and MoUs may never materialize but the interest itself lends some order to chaos; if not a data point for projected growth.
There is a general consensus that logistics industry will see a boom with growth in the retail sector, in industries and services seeking more sophisticated logistic solutions all with a healthy helping of CPEC related and trade activity on the side. Some estimates said at one point in time, you will find 20,000 trucks on the each route. Other estimates suggest, the current capacity of 20,000 to 30,000 units could easily be expanded to 100,000 units.
Perhaps between now till the point many of these new entrants launch their models will see sales catapult. Or they won’t; but it would be interesting to look at some of the feasibility studies done by major players. Remaining circumspect on all else, the good news is this: a national transport policy has been devised and waiting to be approved by the national assembly. When it does, it will be a long time coming.
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