New vehicle sales in the ASEAN region’s top six markets combined grew by 40.6% in the first half of 2010 to 1,187,885 units, compared with 844,760 units a year earlier, as demand continued to rebound from depressed year-earlier levels. Tony Pugliese surveys market trends and prospects in the region.

Indonesia continued to lead the regional recovery, with first-half sales rising by 76% to a new record of 370,208 units – making it the ASEAN’s largest automotive market for the first time. The Thai market also recovered strongly after four years of decline, with first-half sales rising by 54% to 356,702 units despite the political unrest that rocked Bangkok in April and May.

Sales in Malaysia grew by 19.8% to a record 301,077 units; while sales in the Philippines were up by over 37% to 82,147; and Vietnam by 5% to 50,278 units. Only Singapore reported declining sales, by 37% to 27,473 units, despite reporting the strongest economic growth.

Economies across the region have rebounded in the wake of the 2008-09 global financial crisis, helped by government stimulus measures and recovering exports. Consumers and businesses are enjoying historically low interest rates, which has resulted in strong credit growth.

Interest rates have begun to rise across the region, with inflation beginning to pick up as a result of strong local demand, weather-related food price increases and a reduction in government subsidies. But rates are still at historically-low levels and automotive demand has not yet been affected.

Regional vehicle sales are forecast to rise to a new record of 2.2m units in 2010, with growth rates slowing in the second half as year-on-year comparisons get tougher. Thailand and Indonesia will compete fiercely for the title of top regional market this year.


New vehicle sales in Indonesia grew by close to 76% to a record 370,208 units in the first half of 2010, compared with 210,579 units a year-earlier, according to data released by automotive industry association Gaikindo. The market continues to be lifted by robust consumer sentiment and historically low interest rates of 6.5%.

The country’s GDP growth is estimated to have expanded by 5.8% in the first half, led by strong domestic demand and a sharp recovery in exports. Full-year GDP growth is forecast at around 6%, with private investment continuing to expand to meet rising domestic and export demand.

Annual inflation has increased to over 5%, driven by the recent hikes in electricity rates and weather-related food prices increases, in addition to strong domestic consumption. The Bank of Indonesia has not increased interest rates since 2008, but hikes are likely before year-end – which are expected to raise the interbank rate to over 7%. Further rate hikes from there would likely slow demand for new vehicles.

Sales of passenger cars almost doubled in the six-month period to 16,487 units, from 8,302 units a year earlier, driven by rising imports from Thailand. Sales of other light passenger vehicles increase by 68% to 244,503 units. Demand for trucks was also strong, with volumes almost doubling to 107,438 units, from 53,926 units a year earlier.

Indonesia’s leading vehicle distributor, PT Astra International, now expects the vehicle market to hit a new record this year of around 650,000 units – 33% more than last year. The distributor has also noted that consumers, spurred on by easy access to credit, are opting for more expensive models and variants.


The Thai vehicle market continued to rebound in the second quarter, despite the political unrest that brought central Bangkok to a standstill in April and May. The strong market recovery comes after four years of decline and comparisons are made against very depressed year-earlier volumes.

First half sales increased by 54% to 356,702 units, compared with 231,428 units a year earlier, according to data released by Toyota Motor (Thailand). Driving demand higher was a strong economic rebound, led by continued government stimulus – including historically-low interest rates of 1.25% in this period.

GDP grew by 12% in the first quarter, as domestic demand and exports rebounded from very depressed year-earlier levels. More moderate growth is expected in the subsequent quarters. The IMF last week raised its full-year GDP growth forecast to between 7-8%, to reflect improving domestic sentiment in the wake of the recent political unrest.

The Bank of Thailand increased overnight interest rates in July for the first time since the global financial crisis began, by 25 basis points to 1.5%. More increases may follow as demand-led inflation continues to rise.

Toyota Motor (Thailand) last month said it expects the total vehicle market to expand to 650,000 units this year – up from the 600,000 units it had forecast at the beginning of the year. The company cited low interest rates, greater political stability and continued strong economic growth for the improved outlook.


Vehicle sales in Malaysia rose by 19.8% to a record 301,077 units in the first half of 2010, compared with 251,305 units a year earlier, according to data released by the Malaysian Automotive Association (MAA). The market’s strong performance reflects continued strength in consumer and business confidence.

Bank Negara’s interbank interest rates, at 2.75%, remain at historically low levels despite a hike of 25 basis points earlier this month– the second such increase this year. Employment levels in the country have remained stable, helped by the ongoing stimulus spending and a recovery in the manufacturing sector after last year’s sharp decline.

GDP is forecast to grow by between 6-7% this year, with the manufacturing sector continuing to perform strongly in the second half. Inflation remains low, at 2.0-2.5%, making further rate hikes before year-end unlikely.

Datuk Aishah Ahmad, president of the MAA, expects vehicle market growth to slow in the second half of the year, although she forecasts full-year sales to hit a new record of 570,000 units. The previous record for the market was set in 2005 at 552,316 units.

Earlier this month, the government reduced fuel subsidies as part of a broader policy affecting other basics commodities such as gas and sugar. Petrol and diesel prices rose by 3% to MYR 1.85 (USD 0.58) and MYR 1.75 per litre respectively.

Datuk Aishah does not expect the fuel price rises to affect the vehicle market, however. “Malaysia has the cheapest fuel prices in the region, even after the latest price increases”, she said.

“Any further moderate increases in fuel prices and/or interest rates this year are not expected to affect vehicle sales volumes, although some downsizing to smaller models may take place”.

Tony Pugliese

Vehicle sales in the ASEAN region by market, 2007-10 - Source: Industry sources.
  2007 2008 2009 1-6 2009 1-6 2010
Indonesia 434,499 607,805 486,061 210,579 370,208
Thailand 631,250 615,270 548,871 231,428 356,702
Malaysia 487,176 548,115 536,905 251,305 301,077
Philippines 117,903 124,449 132,444 59,909 82,147
Vietnam 80,392 111,946 119,460 47,909 50,278
Singapore 119,215 108,478 76,397 43,630 27,473
Total 1,870,435 2,116,063 1,900,138 844,760 1,187,885