MARKET SNAPSHOT: Malaysia's new National Automotive Policy (NAP)
Malaysia's automotive industry rallied in the second half of 2009 to exceed forecasts that had already been revised upwards. The Malaysian Automotive Association (MAA) reported total vehicle sales of 536,905 units in 2009, down 2% year-on-year (y-o-y). However, this was a vast improvement on the MAA's initial expectation of 480,000 units, forecast at the beginning of the year, and even surpassed the revised forecast of 500,000 units reported in July, says the BMI.
BMI had also revised its sales forecast upwards to a more optimistic 537,500 units, based on data for the first nine months of the year. BMI now expects a return to positive annual growth in new vehicle sales in 2010, albeit at a slow pace initially (1.3% y-o-y in 2010), before stronger growth in 2011-2014. Long-term expectations are high for the small car segment, as the MAA envisages a shift towards more fuel-efficient cars.
This year will also be the first under the new National Automotive Policy (NAP), which came into force on January 1, and is already having an impact on investment projects. Under the terms of a memorandum of understanding (MoU) between Malaysia's Berjaya Corp and China's BYD Auto, the two will explore joint production of BYD's F0 passenger car for export to South East Asian markets. However, the project will need the Malaysian government's approval under the new National Automotive Policy (NAP). Production licences for vehicles under 1.8 litres have been frozen under the new policy, but Berjaya's executive director, Francis Lee, believes the partners have a good case for production of the 1.0 litre F0 as the project is the first step towards making Malaysia the regional production hub for BYD's right-hand drive models.
Greater liberalisation of the industry could go some way to improving Malaysia's position in BMI's Business Environment Ratings, where it currently lies in ninth position with a rating of 52.6 out of a possible 100. While the country is a leading light of the ASEAN trade bloc, which has made it a popular choice for regional production activities in the auto sector, there is the potential for greater things if a proposed free trade agreement with the US is finalised. In terms of the market itself, production growth potential receives an average rating, while potential sales growth is low in comparison with its peers.
The two national brands continue to dominate the market with 60.84% of sales between them. Perodua maintained the lead in 2009 with sales of 166,736 units and a market share of 32.2%, although its sales were down by 0.39%. Proton stayed in second, but recorded growth of 4.3%, with sales of 148,031 units, and a 28.6% share of the market. Toyota Motor was still the best-selling foreign brand, with sales of 81,784 units.
This article is based on the BMI's Malaysia Autos Report Q2 2010 (download)