Trucking sector of Pakistan auto industry rides high
Time will tell how the new Chinese players will grab the share from the already existing players in light and heavy commercial trucks but one
thing is certain the new players will definitely try to roll out latest engine technology as per European standards.
Economic conditions and import/export trade are considered as the life line for the production of light and heavy trucks as import and export
trade is the barometer of country’s economy
The heavy commercial vehicle scenario in Pakistan has surely witnessed drastic changes in the last few years. As many Chinese and foreign brands have tested their luck in the hot-blooded Pakistani market.
The new players are already dominated by Hinopak Motors, Ghandara Nissan, Ghandara Industries and Master Motors which cumulatively enjoy sizable market share. It can be said that the new players have proven themselves to enjoy the profit fairly.The aim to cut a slice from the old players’ share seems a gigantic task but the price difference may lure the price conscious people associated with goods’ carrier business.
After experiencing the Japanese joint venture, a number of seasoned and organized players in the auto assembling business are now with ink agreements Dysin working with leading Chinese truck makers (Sinotruk truck) and Ghandara Industries is working with Dongfeng trucks .Volvo also plans to unveil high quality trucks in Pakistan. One of the leading Japanese companies along with one Swedish heavy vehicle player are collaborating with Chinese DongFeng which is the world’s largest producer of heavy duty trucks. These workings together direct us to a pretty well road which surely is bright for Pakistan.
The expansion of the premises of MAN Diesel and Turbo Pakistan is owing to the increase of capacities to realize the sizeable maintenance contracts the company has undertaken. Furthermore, the premises are extended and customized in such way that MAN Truck and Bus can start its business in Pakistan and develop its sales and after sales services for the region, showcasing trucks, buses and high speed engines in Lahore.
In December 2015, Karakoram Motors signed a contract assembly agreement with M/s Dysin Automobiles Limited for the assembly of their 220 and 290 hp Prime Movers SINO TRUCKS of China.
All assembling arrangements are now completed and commercial production of these trucks will start in the first week of May 2016.
The plant initially assembled 300 units of Euro compliant trucks and prime movers of various categories and was scalable for production output as per market demand. The Joint Venture Agreement was signed by Quarter Master General which is also Officer Incharge NLC Lieutenant General Sajjad Ghani, Chairman HIT Lieutenant General Syed WajidHussain and Senior Vice President NORINCO Wang Lee, said an ISPR press release.
Some of the existing companies in Pakistan are Hinopak, Ghandara, Al-Haj Faw, Afzal Motors (Jac,King & Long van), PM Autos (Faw) Power brand light vehicle etc. Master Motors is a truck manufacturer based in Port Qasim, Karachi as a part of the Master Group of Industries.
Although the present transport system is not up to standards but it can be safely said that it has considerably improved compared to previous years. It is true that economy cannot grow without appropriate modernization of trucking sector. Worthy exports and imports travel on such low standards vehicles turning out to be a major risk.
Time will tell how the new Chinese players will grab the share from the already existing players in light and heavy commercial trucks but one thing is certain the new players will definitely try to roll out latest engine technology as per European standards.
Economic conditions and import/export trade are considered as the life line for the production of light and heavy trucks as import and export trade is the barometer of country’s economy.
The existing players had a nail biting experience from 2009-2010 onwards till 2012-2013. As per figures of Pakistan Automotive Manufacturers Association (PAMA), the overall sales of trucks plunged to 1,948 units in 2012-2013 from 2,394 units in 2011-2012, 2,942 units in 2010-2011 and 3,620 units in 2009-2010.
High truck prices of existing players can be blamed for low sales from 2009-2010 to 2012-2013 besides investors’ shift towards used trucks and Chinese light commercial vehicles. Even investors in goods carrier businesses also lifted only 10,734 units of Suzuki Ravi in 2012-2013 as compared to 17,015 units in 2011-2012. Hyundai Shehzore (Korean made) remained out of production from 2011-2012 to 2012-2013.
However, the PAMA figures for July-October 2013-2014 proved a bit relief for the truck makers as Hino sales stood at 263 units followed by Nissan’s 95 units, Master’s 125 units and Isuzu’s 90 units as compared to 264 units of Hino, 61 units of Nissan, 99 units of Master and 98 units of Isuzu in July-October 2012-2013.
In light commercial segment, Suzuki Ravi’s sales rose to 3,692 units in July-October 2013-2014 as compared to 3,030 in same period last fiscal year. Buyers of Hyundai Shehzorereceiveda good news with start of its production from September 2013 with 150 units, swelling to 300 units in October 2013 and still increasing till date.
One of the leading local truck manufacturers was not satisfied as cheaper Chinese trucks wereposing serious challenge to costly and big truck assemblers while arrival of used trucks continued to haunt the local industry.
One reason was Pak Rupee’s devaluation against major currencies which pushed up the cost of import of parts and accessories thus pushing up cost of production in the last five years especially from July 2013 onwards when one Dollar was equal to Rs 98.50. The peak was when one Dollar was 108. Although the cost is still up as the current Dollar to PKR is 104.8 which still is a major reason for costs going up and competition to weaken.
Chinese truck and commercial vehicle assemblers can sustain the currency parity impact due to cheap parts’ quality and low price of Chinese parts and accessories. Not only the dollar rate but the rising oil prices have had a countable impact on the demand and production.
As the Japanese assemblers are worried over the current heavy vehicle situation, the existing Chinese and Korean investors and upcoming new players must also be alarmed. The import policy permits import of used dump trucks, spraying lorries, waste disposal trucks and prime movers etc which find their way into the market for use as normal trucks. Others avenues also exist for import of used vehicles besides the baggage scheme for overseas Pakistanis which continue to be relaxed for heavy commercial vehicles with the age limit is five years and depreciation limit is two per cent.
Smuggled and under invoiced heavy vehicles are also available in the market. With the above negative conditions, the government has imposed sales tax at the standard rate on locally produced heavy vehicles which has further hit the market.
The assemblers under PAMA feel that the revival of heavy vehicle sector is not possible unless measures are taken to curb the import of used vehicles for which age limit of used trucks being imported under baggage schemes are brought down to three from five years besides cut in depreciation limit to one from two per cent. PAMA feels that there is a need to comprehensively review all the schemes and appropriately pruning the same in the light of their misuse.
The China Pak Economic corridor is going to enhance the heavy duty truck and busses sale. This is because the latest highway is going increase the demand for travelling and people would want to travel in much more luxury and a comfortable manner. It is a great opportunity for Pakistan to attain utmost benefit out of CPEC. The auto industry of Pakistan is surely going to increase if educated steps are taking by related authorities and stake holders. The latest truck launched by Hinopak named Kazay is a new step taken towards the evolution of heavy duty vehicles in Pakistan. It has been noted that the latest technology sales have increased and travelling has become much easier. Not only this heavy duty trucks will be needed to transport goods and services between the two country therefore latest technology trucks will be needed. PAMA has to create favorable policies so that the industry can boom and new investors can enter. With the entry of new manufacturers and assemblers the quality is going to increase and the prices are going to fall because of competition. The Chinese manufacturers which entered the industry have also given a tough time to the local ones which further has moved the auto sector one step ahead. Government should look up into this matter by giving further subsidies to local manufacturers so that the Pakistani heavy duty truck industry also sustains and can compete in the international market.
This exclusive article on commercial vehicles, published in Monthly AutoMark Magazine’s March-2016 edition.
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Muhammed Hanif Memon
Founder and Editor in Chief of Monthly Automark Magazine since 2006. Magazine published from Karachi Pakistan covers Automotive industry of Pakistan, car, motorcycle and tractor news. Magazine distributed in Karachi, Lahore, Hyderabad, Multan, Islamabad, Gujranwala, Faisalabad.