Sectors engaged in businesses for mobility are yet to recover the slacks they absorbed in the March-May period
Leaving behind the standstill period of the nationwide shutdown, wheels are rolling on.
But, sectors engaged in businesses for mobility are yet to recover the slacks they absorbed in the March-May period.
Almost each of the listed companies operating in the automobile, lubricant, and refuelling sectors suffered a drastic fall in sales and profits in the April-June quarter. With the economy gradually having reopened, they have started managing a turnaround but are yet to return to the state they enjoyed in pre-Covid times.
"The shutdown ate away the automobile and automotive industry sales as well as the profits. The businesses are now back to life with a moderate recovery," said Abdul Matlub Ahmad, president of Bangladesh Automobile Assemblers and Manufacturers Association.
The sad thing for the industry is that buyers are desperate to avert increasing liabilities, be it in their families, proprietorship businesses or corporates, he told The Business Standard.
Nowadays, the demand for new commercial vehicles is at 60-65% of what it was before the virus hit Bangladesh, he estimated.
Taskeen Ahmed, vice-president of the association, said corporates began to order for heavy commercial vehicles.
"But they look a little conservative," he reckoned, saying "Demand for heavy commercial vehicles is far from recovery."
Taskeen, also the managing director of Ifad Autos Ltd – the sole marketer of Ashok Leyland commercial vehicles and TVS three-wheelers in Bangladesh, said buses seem to be selling higher following the shutdown period as health safety measures capping the number of passengers increased the demand.
At least his company is now selling 20% more buses than in pre-Covid times.
Taskeen said light commercial vehicles are selling more than heavier ones as those are comparatively lower ticket purchases and, more importantly, have more uses in daily commercial trips for essential goods. At least 80% of the demand has already been restored for light commercial vehicles.
The three-wheeler market, which went through a slowdown in the last couple of quarters, now observes around half the demand in regular times, if the recent most monthly spike in sales is considered as a one-off demand.
The Chattogram city authority has made it compulsory to replace CNG-run three-wheelers that have accomplished their 15-year life, and it has boosted the sales of new vehicles by 5-6 thousand units recently. Otherwise, the three-wheeler market demand is nearly at half, said Taskeen.
However, his company – that absorbed losses in the April-June quarter – posted a 4% growth in revenue and a 38% growth in profit for July-September.
Sales of commercial vehicles and cars were a reflector of the economic slowdown in the second half of 2019, following a boom in the previous two years.
Apart from Ifad Autos, no listed companies from the mobility-related sectors witnessed growth in profits in the post-shutdown quarter, be it Runner Auto, the two-wheeler manufacturer and commercial vehicle seller, or Aftab Automobiles, the Hino bus body maker and Keeway-Benely motorcycle seller, or the state-owned two-wheeler assembler, Atlas Bangladesh.
Compressed natural gas (CNG) providers like Navana CNG, Intraco CNG, or Bangladesh Autocars are also the ones who absorbed the slowdown on their ways to recovery.
MJL Bangladesh, which suffered a 61% profit slump in the April-June period, has registered a 5% revenue drop and a 30% profit degrowth in the July-September quarter, in contrast to those a year ago.
Azam J Chowdhury, managing director of the lubricant market leader also engaged in the growing liquefied petroleum gas market, told The Business Standard, "During the shutdown, at least some vehicles and engines ran and saved the lubricant industry's back in the April-June quarter."
Until now, 70% of demand has at best been restored, he said.
"Of the vehicle categories, passenger cars have been hit the hardest as middle-class families hesitate while making a purchase decision in an uncertain economic year," said BAAMA President Abdul Matlub Ahmad.
In the post-shutdown months, the passenger car market has been marching with a one-fourth of the demand at best, if compared to the pre-Covid level, said Matlub Ahmad, the joint venture partner of TATA commercial vehicles, passenger cars and Hero motorcycles.
The two-wheeler market is in the best shape as people with their desire for owning a vehicle are opting for the two-wheeler, which is affordable for them.
Two-wheeler sales now stand at 80% of it was in normal times, he added.