Sales deteriorated in Indonesia, Thailand and Malaysia 

2015 is turning out to be mixed for vehicle demand across the ASEAN region, big markets seeing falls while smaller ones grow

2015 is turning out to be mixed for vehicle demand across the ASEAN region, big markets seeing falls while smaller ones grow

New vehicle sales in southeast Asia's deteriorated significantly in the second quarter, according to data collected exclusively for just-auto by AsiaMotorBusiness.

Sales volumes in the region's six main markets combined declined by almost 16% to 676,865 units in the second quarter, compared with 804,886 units in the same period of last year, reflecting sharply lowered demand in the three largest markets - Indonesia, Thailand and Malaysia.

By contrast, sales in southeast Asia's three smallest reported markets, the Philippines, Vietnam and Singapore, continued to grow strongly.

Overall regional sales in the first-half of 2015 fell by almost 10% to 1,450,585 units, compared with 1,609,566 units in the same period of last year.

The new vehicle market in Indonesia, the region's largest since last year, dropped by 22% to 243,200 units in the second quarter. This made it South-east Asia's worst performing market in the first half of the year, with sales declining by over 18% to 525,500 units - reflecting a significant slowdown in the country's economic growth.

The vehicle market in Thailand also continued to spiral downwards in the second quarter, with sales falling by almost 21% to 171,734 units after a 34% drop in the same period of last year. First-half sales fell by over 16% to 369,004 units, according to data released by the Federation of Thai Industries.

The country's economy remains sluggish, with second-quarter growth estimated to have dipped below the 3.0% growth rate seen in the first quarter and representing a weak rebound from very depressed year-earlier data.

Sales in Malaysia declined by over 11% to 153,878 units in the second quarter, resulting in a 3.3% decline in the first half to 322,184 units. Domestic sentiment has been affected by rising economic uncertainty following the introduction of the new goods and service tax (GST) in April, slowing exports and the falling value of the ringgit against the US dollar.

The Philippine market continues to be driven higher by strong economic growth and low interest rates. Sales rose by more than 16% to 70,950 units in the second-quarter, while first-half sales were up by almost 18% at 142,154 units - excluding some of the smaller imported brands.

The country's manufacturers' association CAMPI expects the vehicle market to reach a new record high of 310,000 units this year on the back of buoyant consumer and business sentiment and strong growth in domestic consumption.

Similarly, Vietnam's new vehicle market continues to enjoy a prolonged period of strong growth, with second-quarter sales rising by 65% to 50,877 units. First-half sales increased by 67% to 91,711 units, as the domestic economy continued to gain momentum - driven by low inflation and interest rates and strong investment growth.

The Singapore vehicle market also continued to recover strongly from a multi-year low, with second-quarter sales almost doubling to18,599 units - lifting first-half sales by close to 80% to 31,895 units.

Indonesia

New vehicle sales in Indonesia fell by over 22% year-on-year to 243,200 units in the second quarter of 2015, compared with a 14% drop in the first quarter. Cumulative first-half sales fell by over 18% to 525,500 units, from 642,100 units a year earlier.

The country's economy is not expected to have improved significantly in the second quarter, after GDP growth slowed to 4.7% year-on-year in the first quarter. High interest rates continued to put pressure on household budgets and consumer spending, while the new government is still struggling to get its spending on track.

Exports declined by close to 12% to US$39.2bn, from US$44.5bn a year earlier, reflecting falling demand for commodities and also weaker prices. Bank Indonesia (BI) said the current-account deficit has likely widened to 2.3% of GDP.

The main bright spot in the second quarter was an 18% increase in realised foreign direct investment (FDI) to IDR92trn (US$6.8bn).

But the local currency has weakened by almost 8% against the US dollar since the beginning of the year, which also has had a negative effect on local sentiment as has growing uncertainty over government policy and spending.

The vehicle market is expected to improve in the final quarter of the year, with the launch of some important new models likely to trigger a rise in replacement sales. But sluggish economic growth and high interest rates will hold back potential gains, as will the recently announced hike in import duties on CBUs.

Thailand

The new vehicle market in Thailand continued to weaken in the second quarter, with sales falling by almost 21% year-on-year to 171,270 units compared with a 12% drop in the first quarter.

Cumulative first-half sales fell by over 16% to 369,004 units, from 440,911 units in the same period of last year.

The Thai economy is struggling to bounce back from last year's near-recession despite record-low interest rates. GDP growth in the second-quarter is estimated to have dipped below the 3.0% growth rate seen in the first quarter, which represents a weak rebound from very depressed year-earlier data.

Sluggish exports and weak domestic consumption continued to hold back economic growth in the second quarter. Making matters worse was a severe drought in parts of the country affecting agricultural output, which combined with weak commodity prices has further depressed rural incomes.

Consumer spending continues to be held back high household debt, despite the Bank of Thailand cutting its benchmark interest rate twice this year to a historic low of 1.5%.

Economic growth is expected to improve in the second half of the year, helped by an increase in government spending - with some large-scale infrastructure projects soon to be launched. But few are optimistic that growth will be significantly above 3% this year.

The vehicle market no doubt will benefit from recent new model launches, including the best-selling Toyota Hilux. New excise taxes based on emissions and fuel-efficiency due to be introduced next year may also encourage buyers to bring 2016 purchases forward.

The industry's expectations for the full year continue to be lowered, however, with the FTI cutting its 2015 forecast to 850,000 units compared with its earlier forecast of 950,000 units.

Malaysia

Malaysia's new vehicle market declined by more than 11% to 153,878  units in the second quarter, compared with 173,243 units in the year-earlier period, according to the Malaysian Automotive Association (MAA).

This followed a 5.2% rise in the first quarter, resulting in a 3.3% decline in cumulative first-half sales to 322,184 units.

After growing by 5.6% in the first quarter, the country's economic growth is estimated to have slowed significantly in the second quarter, with exports declining sharply and domestic sentiment starting to be affected by rising economic uncertainty.

The Malaysia ringgit has declined by over 8% against the US dollar since the beginning of the year, reflecting among other things the country's deteriorating current account.

Domestic consumption looks to have been disrupted by the introduction of the new goods and service tax (GST) in April. Commercial banks have become more cautious, while rising inflation has put household budgets under pressure.

The MAA has lowered its full-year market forecast from 680,000 to 670,000 in view of the weaker second-quarter sales, but this still looks somewhat optimistic.

Vehicle sales in the ASEAN region by market, 2012-15

  2012 2013 2014 H1 2014 H1 2015 %ch
Indonesia 1,116,230 1,229,901 1,208,019 642,100 525,500 -18.2
Thailand 1,436,335 1,325,079 881,832 440,911 369,004 -16.3
Malaysia 627,753 655,793 666,465 333,156 322,184 -3.3
Philippines 182,779 212,682 270,372 120,608 142,154 17.9
Vietnam 80,652 96,692 133,588 55,007 91,711 66.7
Singapore 33,914 27,374 42,980 17,774 31,895 79.4
Total 3,477,663 3,547,521 3,203,256 1,609,566 1,450,585 -9.9

Sources: www.AsiaMotorBusiness.com from industry sources.