Pakistani Motorcycles Industry was found by Covid19 at the peak of growth and is now rapidly falling down. In April sales collapsed (-97%) and the control of virus spread is still hard, projecting huge negative impact on the economy in general and on the motorcycles industry specifically, with full year 2020 outlook down 30% below the 1.2 million.
2020 Motorcycles Market trend & outlook
Despite high expectations for a recovery, following the double-digit lost reported in the previous year, the start of the 2020 has not been positive in Pakistan with Year to Date February sales at 281.542, down 2.9% .
The arrival of Covid19 emergency was the “perfect storm” on a market and sales fell 27.9% in March, before the total activities shutdown which pushed sales down 97% in April, with only Honda delivering 2k unit. Year to date April sales have been 383.804, down 33.9%.
The outlook is very negative. Actually Pakistan is still in the middle of the battle to contain the Covid19 spread and the delay in restart activity will penalize awfully the purchasing power with a low demand even in the post-covid19 environment.
At the moment our view for the full year 2020 is for 1.17 million sales, down a huge 30% from the previous year.
Following years of records, in 2019 market down 12%
According to data released by the Pakistan Association of Automotive Manufacturers, in the 2019 the new two/three-wheeler sales have been 1.67 million, down 12.0%. Following years or rapid development, in the 2019 the market had been hit by the imposition of various new taxes and duties by the government such as the Federal Excise Duty (FED). With a sharp depreciation of Pakistani Rupee against the US dollar, the vehicles prices went up massively, reducing the demand.
As far as regard the competitive landscape, all competitors are producing locally and just a reduced number of manufacturer are fighting in the market, with local brands (DYL, Sohab, United Auto, Sazgar, Road Prince, Hero Motor (a Pakistan company) Ravi) Japanese (Honda, Suzuki and Yamaha) and Chinese (Qingqi).
The most of the demand is concentrated on motorbikes in the 125-150 cc range quite flexible for the local unpaved roads and affordable for people with a still limited purchase power. Premium brands are not yt landed here as the scooter manufacturers, because their segment are negligible. Even Japanese are locally producing low displacement-low cost models and not importing their top class models.
Market leader is Honda with over 60% of market share and 2019 sales at 1.08 million units (+5.5%) with the CB 150F as best model.
In second place there is the local brand United Auto with 339.537 sales (-20.1%) and in third Road Prince with sales at 145.426 (-27.3%).
Pakistani Market Heritage
Before 2004, nobody could ever think, Pakistan motorcycle industry could flourish at such an exorbitant scale. In those years the market volume was below 0.1 million annual units and there were only two companies,Atlas Honda and Dawood Yamaha,operating in the market. Suzuki and Qingqi had very small share.
Thanks to a government open policy, new manufacturers entered the market backed by Chinese technology, and the sector become crucial to sustain the economic development of Pakistan in the last 15 years, becoming – by far – the first solution for individual mobility.
The following factors played a vital role in this development:
- Cheap but reliable technology from China.
- Independent sourcing of technology i.e Engines from China and Body parts from local vendors.
- Assemblers of Japanese brands had to pay a big amount as royalty to their principals, while new assemblers are sourcing everything independently. It has reduced bike cost.
- Overhead expenses are small as most of the companies operate in limited areas.
- Financing/leasing facility is available at local level. This facilitated lower-income people to buy a bike despite limited resources.
In recent years, Pakistani motorcycles industry has been among the fastest in the World. Indeed, the milestone of 1 million units has been hit for the first time only in the 2015 and now the market is already running towards the 2 million annual sales. Following the over 1.4 million sales achieved in the 2017, the market further boomed in the 2018, with a record of 1.9 million sales. up 6.6%, and scoring the All Time Record.
However, the depreciation of rupee, the tax increase and less cash available for credit, penalized the market since the end of 2018, with motorcycles price further increasing discouraging the demand and the market has taken a negative path.
This article was written with the contribution of Mr. Imtiaz Ahmad, a Motorcycles professional living in Pakistan.