The year 2010 saw vehicle sales across south-east Asia hit new records driven by strongly performing economies. Some slowdown to the pace  is forecast for 2011, writes Tony Pugliese.

New vehicle sales in the ASEAN region’s six largest markets grew by close to 32% to a new record high of 2,501,084 units in 2010, from 1,898,033 units in 2009, according to data collected by from industry sources across the region.

All major markets posted new record highs last year, including Thailand, Indonesia, Malaysia and the Philippines, while Vietnam came close. Only Singapore reported continued market weakness.

A year-end surge in deliveries to dealers helped Thailand retain its status as the leading ASEAN automotive market, with December’s Thai International Motor Expo stimulating some late buying interest. But Indonesia is expected to continue to challenge for this position in the coming years.

Economies across the region benefited from low interest rates and increased government expenditure through stimulus measures introduced to help reverse the effects of the recent global financial crisis. GDP growth in most countries in the region was above average last year, helped also by a rebound in exports and rising commodity prices. But growth is expected to be slower this year.

The industry expects sales growth to continue across the region in 2011, albeit at a much slower pace than last year. With inflation exceeding government targets in many countries, pressure to increase interest rates is rising. And with markets becoming more saturated, regional sales are unlikely to exceed 2.6 million units in 2011.

Thailand

The Thai vehicle market expanded by almost 46% to a new record high of 800,367 units in 2010, compared with 548,871 units in 2009, according to data released by the Federation of Thai Industries. December sales alone amounted to 93,122 units, with the end-of-year Thai International Motor Expo giving the market an additional push.

The Thai economy is estimated to have expanded by close to 8% in 2010, with low interest rates helping to drive domestic consumption, combined with strong export growth.

Passenger cars once again outperformed, with sales rising by 50.7% to 346,750 units in 2010, while commercial vehicle sales were up by 42.3% to 453,617 units. Toyota’s sales increased by 41.4% to 325,750 units, for a market share of 40.7%.

The industry remains upbeat about the outlook for the market in the short term, with Toyota forecasting a 7.5% rise in sales to 860,000 units in 2011. The Federation of Thai Industries is more cautious, given the recent record volumes. It forecasts a flat market of around 800,000 units.

Economic growth forecasts for 2011 range between 3.5-4.5%, a sharp slowdown from the bounce-back levels of 2010. Interest rates were hiked by 50 basis points in January to 2.25% and could go up further with inflation projected at around 3.5-4.0% this year.

Indonesia

New vehicle sales in Indonesia rose by 57.5% to a new record high of 764,710 units in 2010, from 486,061 units in 2009, according to data released by automotive manufacturers’ association Gaikindo.

A further 1,500 heavy trucks are estimated to have been sold in the country last year, mostly to the mining industry. Sales of passenger vehicles increased by 50.7% to 541,475 units, while commercial vehicle sales grew by 79.8% to 223,235 units.

Toyota underperformed the overall market just slightly, with sales rising by 50.3% to a record 280,680 vehicles year, to claim a share of 36.7% of the Indonesian vehicle market. Toyota’s Daihatsu subsidiary came second, with sales rising by 53% to 118,591 units, for a 15.5% market share.

The two brands enjoyed high demand for the Avanza and Xenia compact MPVs, with combined domestic sales rising by 45% to 207,700 units.

Third-placed Mitsubishi-Fuso, which is mostly focused on the commercial vehicle market, reported a 72.5% rise in sales to 106,483 units. Suzuki’s sales increased by 59.3% to 71,210 units; and Honda’s by 55% to 61,336 units.

Indonesian economic growth is estimated at just below 6% in 2010, with the domestic economy accounting for a major part of this growth. Bank of Indonesia interest rates, at 6.5%, are low by historic standards and expansionary. The economy has also benefited from a sharp rebound in exports, with local industries enjoying particularly strong overseas demand for commodities and energy. These sectors helped the commercial vehicle sector outperform last year.

The vehicle industry is cautiously optimistic that the market can sustain the current high volumes, with most local marketing directors and CEOs interviewed in the last month expecting sales to exceed 800,000 units this year.

All conceded that there are a number of significant negative factors that will come into play this year, including a sharp increase in fuel costs for private motorists and higher vehicle taxation.

With inflation already well above the government’s target, interest rates inevitably will rise in the coming months. GDP growth is widely forecast at around 6% this year, driven by continued strong overseas demand for energy and natural resources. But analysts expect the market this year will struggle to climb significantly above 2010 levels. The impact of higher fuel costs alone will have a significant impact on household budgets.

Malaysia

Vehicle sales in Malaysia rose by 12.7% to a new record high of 605,156 units 2010, from 536,905 units in the previous year, according to data released by the Malaysian Automotive Association (MAA). Passenger vehicle sales increased by 11.8% to 543,594 units, while commercial vehicles sales rose by 21.8% to 61,562 units.

The country’s second national carmaker, Perodua, maintained its lead position with 188,641 sales last year, for a 34.7% share of the passenger vehicle market. Proton came second with 156,960 sales, for a market share of 28.9%. Toyota sold a total of 71,065 units, up 8.1% year on year; while Honda sold 44,483 units (+14.7%) and Nissan 26,322 units (+13.6).

The economy has bounced back strongly from the 2009 recession, with GDP growth estimated at 6.8%, helped by government stimulus including low interest rates, and a rebound in manufacturing and exports.

Consumer and business confidence remains high, and unemployment levels are low. Foreign direct investment rose sharply last year, to USD 7 billion from USD 1.4 billion in 2009. The MAA believes current volumes are sustainable, but expects only moderate growth this year – to 618,000 units.

Economic growth is expected to slow to around 5% in 2011, with weaker year-on-year exports as western economies struggle to maintain demand. Bank Negara hiked interest rates late last year to 2.75%, and further hikes later this year can be expected in response to rising inflation.

Tony Pugliese

Vehicle sales in the ASEAN region by market, 2007-10
  2007 2008 2009 2010
Thailand 631250 615270 548871 800367
Indonesia 434499 607805 483548 764710
Malaysia 487176 548115 536905 605156
Philippines 117903 124449 132444 170216
Vietnam 80392 111946 119868 112796
Singapore 119215 108478 76397 47839
Total 1870435 2116063 1898033 2501084
Sources: www.AsiaMotorBusiness.com from industry sources.