Sales for light and heavy commercial vehicles have fallen sharply in the past eleven months compared to last year (and a few years before that), the decline most notable in the trucking sector. Compared to passenger cars that rallied up until a few months ago, the austerity drive and slowing economy hit the commercial vehicles segment almost immediately this fiscal year. Built unit imports for commercial vehicles have dropped by 40 percent in 11M. Meanwhile, knocked-down unit imports have dropped by 13 percent, translating to a decline in sales of domestically assembled LCVs by 15 percent and HCVs by a drastic 35 percent. This fiscal year is going to end with the same foreboding that it started, and it may not be too different in the coming year.
The pickup segment has introduced two new vehicles—Isuzu’s D-Max and JAC motors X200—which have contributed to some 900 units to the total count this year. In that context, the 15 percent decline may not be a consolation after all since both Hilux and Ravi are not only selling less, they are also finding their market share more spread out. The numbers reported by the automotives association may not even reflect industry volumes entirely since it does not include some Chinese players like FAW that are producing vehicles domestically, while imported pickups like Kia’s Frontier or JW Forland are also not included. Though evidently, PAMA numbers together with import figures demonstrate the shrinkage in the commercial vehicle market quite well.
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 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.
Fortunately, or unfortunately—depending on whether you are a truck user or a truck seller—the government plans on controlling axle load of the trucks to control overloading. This would increase demand for commercial vehicles. If at the same time, the government can introduce quality standards for the outdated fleets still in use—as promised under the never published National Trucking Policy—it would further boost demand. It would be costlier for transporters and fleet managers though, which would burden them at a time when taxes are high, fuel is more expensive and demand for goods is down. There is no win-win here. In fact, it may very well be a lose-lose scenario all around. Worse still, the magic Chinese wand is not coming to save the day just yet.
Comments
Comments are closed.