Automobile sales yet to fully recover, but signs of hope are there

The automobile market in Bangladesh has yet to recover to the pre-pandemic level, be it for two-wheelers, passenger vehicles or commercial vehicles, say industry players.

However, an average 70%-80% recovery of unit sales at the year-end, compared to those before the pandemic, reflects a better-than-expected scenario.

Abdul Matlub Ahmad, president of the Bangladesh Automobile Manufacturers and Assemblers Association, said for commercial vehicle segments, the October-December quarter was better than the previous three months as economic activities strengthened over that period.

But sales of two-wheelers and busses slightly slowed down in the second quarter of this fiscal year, mainly because there had been a sudden demand for them in the previous quarter, just after the lockdown was lifted and people were very serious about social distancing.

Matlub Ahmad, also the chairman of Nitol Niloy Group that sells Tata passenger cars, commercial vehicles and Hero two-wheelers, estimates that in the July-September quarter overall commercial vehicle sales were around 35% of the pre-pandemic sales and it has improved to 55% now.

At the end of December, large truck sales were still stuck at 30-35% of the pre-Covid-19 levels, while medium trucks and pickup vans already recovered at least 80% of their pre-pandemic sales.

Taskeen Ahmed, managing director of Ifad Autos Ltd – that sells Ashok Leyland commercial vehicles – told The Business Standard that his company's commercial vehicle sales recovered up to 80% of the pre-pandemic level.

No segment is consistently selling well when compared to the pre-Covid-19 levels, as the shutdown and social distancing had some economic impacts on most of the users, and also on the sellers, said Hafizur Rahman Khan, chairman of Runner Group – that sells two-wheelers of five brands, Bajaj three-wheelers and Eicher commercial vehicles.

Khan is now waiting for the schools to reopen and the sales of passenger vehicles. including of three-wheelers. to rise.

"Demand for vehicles is linked with the chain of economic activities," he said.

Khan added that Bangladesh's economy has shown a good level of resilience against the Covid-19 crisis compared to many other countries, and this is why he is optimistic about brighter days for this sector.

Ifad is selling more pickup vans now compared to a year ago. The company saw a hike in orders for buses in September-October, but the orders again flattened in recent weeks.

"Now the best thing is we have begun to receive corporate orders for large trucks after a year of pause, especially from construction material industries," said Taskeen of Ifad Autos.

Listed companies' performance

Ifad Autos, a listed company, posted 4% year on year sales growth and 38% profit growth in the July-September quarter. However, in the following quarter, it registered a sales de-growth of 13% compared to that a year ago, and ended the October-December quarter with less than 4% profit growth.

However, both Ifad and Runner posted significant sales and profit growth in the October-December quarter if compared to the previous one.

Runner Automobiles, the other listed company, suffered 33% and 42% year on year decline in sales and profits respectively over the July-September period. In the latest quarter that ended in December, it posted 7.6% sales growth and 2.2% profit growth.

But it was not enough to post positive sales and profit growth in the first half of the fiscal year.

Ifad also registered 5% less revenue over the July-December period with 15% year on year profit growth.

Of the two other listed automobile companies, Aftab Automobiles – the seller of Hino buses, Mahindra and Keeway-Benelli two wheelers – suffered a 53% sales and 65% profit decline in the July-December period.

Atlas Bangladesh Ltd, the state owned two-wheeler assembler, suffered a 37% revenue decline in the last six months of 2020, compared to that a year ago, and its losses rose by 85% over the period.

Both Aftab and Atlas are in a long trend of underperforming their peers.

All the companies enjoyed reduced financial expenses during the July-December period due to the interest rate cut.