Trucking sector of

Pakistan auto
industry rides high
MAR 11, 2016 07 LIKES 1,184

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 countrys 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
worlds 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 countrys 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 Nissans 95 units, Masters 125 units and Isuzus 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 Ravis 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 Rupees 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 Magazines

March-2016 edition.