Light vehicles sales across Asia rose 8% in 2007, to 19m units, according to latest estimates from automotive analysts JD Power & Associates (JDP). Most of this growth came from China.

According to Meg Sunako, who is responsible for forecasting Asian markets for JDP, Asian economies performed well last year, boosted by strong intra-regional trade and consumer spending. However, the performance of the individual automotive markets was mixed.   Light vehicle sales were buoyant in China, India, Australia, Korea, Indonesia and the Philippines but sales declined in Japan, Taiwan, Thailand and Malaysia in 2007 for different reasons. 

China

China continued to lead regional growth (in terms of both economic growth and vehicle sales growth) in 2007.  Total light vehicle sales reached just over 8m units in 2007, up 20% over 2006.  However, there is evidence that sales slowed at the end of the year. According to Sunako's analysis, the seasonally adjusted annualised rate (SAAR) averaged around 8.4m units between August and November, but fell to around 8m units in December.

"Perhaps, a decade-high inflation, higher interest rates, and recent stock market declines are beginning to dampen consumers' willingness to spend on vehicles," said Sunako. "Some might have simply postponed vehicle purchases to the new year, waiting for a new round of sales campaigns (and possible price cuts) and new models launches prior to the Chinese New Year (in February )."

India

India's economy and light vehicle market also recorded robust growth in 2007, but both are expected to lose some steam this year.  Total light vehicle sales reached 1.69m units in 2007 (a record high), up 16% from 2006.  Passenger car sales were up 14% to 1.4m units, according to the JD Power analysis.

"Looking closely, however, on a SAAR basis, the sales pace of passenger vehicles has leveled off at around 1.4m units throughout 2007 and is not rising, which suggests that some slowdown is ahead," said Sunako. She said that vehicle manufacturers are already complaining about high interest rates and rising material and energy costs.

Other risks are also mounting. They include ongoing stock market corrections, higher interest rates, and high energy and food prices, and a possible bursting of the property market bubble. 

"As in China, retail fuel prices are heavily subsidised in India, but the government is likely to be forced to raise fuel prices this year," said Sunako.

On a positive note, the introduction of the Tata Nano later this year could boost sales.

East Asia

In East Asia, both Korea and Taiwan's economies outperformed expectations in 2007, driven by buoyant export and domestic demand. "Korea's vehicle sales continued a recovery (since the bursting of the credit card spending bubble in early 2003).

"In contrast, Taiwan's market continued to struggle to recover since the bursting of its credit-card spending bubble in early 2006," said Sunako.

South East Asia

Thailand's domestic economy and vehicle sales have begun to recover since the military coup in September 2006.  In Malaysia, vehicle sales finally began to bottom out following a plunge due to tax changes introduced in 2006. In Indonesia, both the economy and the automotive market continued strong recoveries, following the mini-oil shock in October 2005, which caused a massive hike in fuel prices.  In the Philippines, a booming economy translated into strong vehicle sales in 2007.

Japan and Australia

JD Power's definition of Asia includes Japan and Australia. The Japanese economy remains fragile and vehicle sales continued to disappoint in 2007, noted Sukano.

Australia, however, is booming and saw sales breach the 1m-unit mark in 2007 for the first time ever.