ISLAMABAD – Cumulatively, commercial vehicles and tractors have declined sofar in four months ending Oct-19 by 44 percent with a massive dropwitnessed in pickups (down 55%), with nominal declines in trucks and buses.
But truck sales had already dropped 40 percent in FY19 year on year. Theyare now trailing their lowest points in history. Imports in completelybuilt units (CBU) have dropped by 75 percent in Jul-Sep 2019 period againstthe corresponding period last year. Since, most manufacturers use CKD kitsto locally assemble units, another important number is CKD imports fortrucks and commercial vehicles where the decline is 41 percent. Thisdirectly feeds into production and the decline is testament of fallingdemand.
On the other hand however are several Chinese companies (Chinese Forland,Joylong, Changan or the likes of Daimler AG and Mercedes Benz) stillplanning to enter the now shrinking market for commercial vehicles hopingto grab a share including South Korean Kia and Hyundai and the latestaddition in the list Malaysia Proton coming into partnership with Al-HajjFAW.
Though many of the plans to launch commercial vehicles are still not dueuntil FY21 which may set a positive spin to the economy at large, andcommercial activity in particular.
Rising commercial vehicle sales can indicate the level of economy activityin the country. Substantial declines mean commercial activity has sloweddown and new growth is not taking place. Freight forwarders, transporters,and logistic companies are not finding reason to expand or replenish theirfleet and new players are not entering the market. This is intuitive.
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Purchasing powers have reduced which is leading to reduced consumption inthe economy which is currently being replaced by savings and investments.Production as a result is also declining which in turn translates to lesstransportation.
Macro-stability will remain the biggest concern for the sector goingforward as demand recovery depends on it.
