Aftab Automobiles records lifetime low in Hino bus sales

Infographic: TBS

Aftab Automobiles Limited – the exclusive distributor of Hino buses in Bangladesh – appears to have lost its prominence in the commercial vehicle industry as the Japanese brand struggles to maintain momentum against increasing competition, primarily from Ashok Leyland and Tata.

The company – listed on the country's stock exchange – reported selling only 21 units of Hino buses in the fiscal 2023-24, marking its lowest sales in history, according to its annual report.

In FY17, Aftab Automobiles sold 704 Hino buses, generating Tk296 crore in revenue. However, the earnings dropped by 96% to Tk12.46 crore the last fiscal year.

In contrast, another listed firm, Ifad Autos, reported selling 937 units of Ashok Leyland buses in FY24.

The business slowdown significantly impacted Aftab Automobiles' consolidated revenue, which dropped to just Tk48 crore in FY24 – a 59% year-on-year decline. At its peak, Aftab Automobiles achieved Tk481 crore in revenue in FY18 – the lifetime highest.

During the last fiscal year, the company reported a loss of Tk14.82 crore, a sharp downturn compared to a profit of Tk0.41 crore in the previous year.

Aftab Automobiles has been assembling Toyota and Hino vehicles for the Bangladeshi market since 1982. It also has a subsidiary company, Navana Batteries Limited.

A senior officer of the company, speaking to The Business Standard on condition of anonymity, said it was unable to open letters of credit (LCs) due to loan repayment challenges and a shortage of foreign currency in the country. This situation severely hindered the import of new Hino bus chassis.

He further said the company currently has outstanding loans exceeding Tk1,000 crore. Rising interest costs have created significant obstacles, as earnings are insufficient to cover loan instalments.

Saiful Islam, managing director of Aftab Auto, could not be reached for comments.

In the FY24 annual report, Shafiul Islam, chairman of the company, stated that 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 predict overcoming 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.

The directors' report for FY24 noted that disruptions in trade, along with food and fuel price shocks, have contributed to high inflation and tighter local financing conditions. 

Consequently, Aftab Automobiles was unable to achieve its targeted goals. However, the company remains optimistic, having implemented necessary measures to boost production and sales moving forward.

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

Aftab Auto's shares closed at Tk 34.80 each on Thursday at the Dhaka Stock Exchange, 0.58% higher than the previous session.

Meanwhile, during the July-September quarter of FY25, Aftab Automobiles reported that its consolidated revenue grew by 70% to Tk17 crore compared to the same period the previous year, mainly driven by its subsidiary business engaged in producing batteries for the automobile industry.

However, despite the revenue growth, the company incurred a loss of Tk4.69 crore, with a loss per share of Tk 0.44 during the quarter.