Hino's waning popularity eats into revenue, profit of Aftab Auto

Aftab Automobiles Limited, the exclusive distributor of 'Hino' buses, seemed to have lost its glory within the commercial vehicle industry as Hino lost momentum in the face of increasing competition from other brands such as Ashok Leyland, Tata, and Eicher.

Over six years till the fiscal 2022-23, the publicly listed firm's revenue dropped around 75% and stood at Tk118 crore.

In FY17, the company sold 604 Hino buses, which came down by 70% to only 181 units in FY23, according to Aftab Auto's annual report.

On the other hand, another listed firm—Ifad Autos—posted a 60% growth in sales of Ashok Leyland buses to 1,804 units in the last seven years till FY23.

Market insiders said Hino was once the most popular bus on the country's long-distance routes. But its popularity is fading owing to the emergence of India-based buses like Ashok Leyland, Tata, and Eicher.

These buses are 40-50% cheaper than Hino and also provide good long-distance service, market insiders said.

Besides, the demand for air-conditioned buses is much higher than the non-AC ones in Bangladesh. Hino has failed to capture the country's market in this area. Scania, Hyundai, Volvo, and Ashok Leyland are the top choices of bus operators.

Aftab Auto's Managing Director Saiful Islam could not be reached over phone for comments.

In the FY23 annual report, its Chairman Shafiul Islam stated the commercial vehicle industry is facing a volatile environment in a rapidly changing competitive landscape.

"However, we believe the impact of the economic crisis on the business is temporary. We predicted to overcome the current environment within the next year."

"A revolutionary change occurred in the transport sector after the Padma Bridge connected the country's southwestern part with the capital. As a result, there is a growing demand for AC and non-AC buses with the opening of new routes," he added.

Managing Director Saiful Islam stated in the annual report, "Aftab Auto could not achieve its target."

The company's downturn continued in the ongoing fiscal as its revenue fell 69% year-on-year to Tk10.44 crore, and it made a loss of Tk6.68 crore in the July-September quarter.

Aftab Auto explained in its financial statement that the decrease in revenue was notably influenced by two factors—changes in chassis models and the persistent challenges associated with the dollar crisis affecting the opening of letters of credit (LC).

Additionally, the company stated that the introduction of new chassis models played a significant role in the decline in sales. Customer adaptation to these changes often requires a transition period, during which sales may undergo a temporary downturn.

Besides, its external debt burden increased alarmingly. At the end of September this year, its long-term loan stood at Tk905 crore, which was 85% higher compared to FY22.

Despite the decreasing business, the company paid dividends to the shareholders regularly. In the last fiscal year, it paid a 10% cash dividend only to its general shareholders.

Aftab Auto's shares closed at Tk28.30 each on Wednesday at the Dhaka Stock Exchange, which was 0.71% higher than the previous session.

Since December 2022, Aftab Auto has suffered a 24% reduction in its share price because the stock failed to attract investors amidst the company's downturn in business.