New vehicle sales in the ASEAN region’s six largest markets increased by 5% to 733,090 units in the first quarter of 2012, due primarily to strong growth in the region’s two main markets – Thailand and Indonesia.

The automotive industry continued to recover from the severe floods that crippled economic activity in large parts of Thailand in the fourth quarter and caused inventory shortages among dealers across the region. Regional sales growth in the first quarter was boosted by restocking and fulfilment of unmet orders.

Pent-up demand remains particularly strong in Thailand, after the severe disruption to the domestic market and to supply in the fourth quarter, driving first-quarter sales 16% higher year-on-year. Stimulus policies such as first-time buyer incentives designed to lift sales of the country’s growing range of small “eco cars” also help boost growth.

With Honda restarting output at its plant in Ayutthaya province the end of March, strong growth is expected to continue throughout the year. The country’s leading vehicle manufacturer, Toyota Motor Thailand, expects the Thai market this year to be the first in the region to exceed one million units.

Other governments in the region are growing increasingly concerned about the level of consumer borrowing, after several years of strong growth. Malaysia introduced minimum down-payment requirements on car loans in January and this has had a detrimental effect on the market, with volumes declining by almost 11% in the first quarter.

Bank Indonesia also announced that similar restrictions on car loans will be introduced in June and the industry is wary of the potential effect on sales. The market also faces potential disruption from cuts in fuel subsidies later this year.

Sales in Vietnam fell sharply following an increase in vehicle taxation at the beginning of the year, with many vehicle buyers having brought sales forward to avoid the higher cost.

Sales in the Philippines were down just marginally, with economic growth yet to pick up after slowing significantly in the second half of 2011.  Full-year GDP growth was 3.7% in 2011, compared with around 5% in the first half of the year.


New vehicle sales in Thailand grew by 16.3% year-on-year in the first quarter to 277,635 units, as domestic vehicle output rebounded from a disastrous fourth quarter of 2011 which saw output severely hampered by the worst floods to hit the country in 50 years.

Most vehicle manufacturers ceased production for at least one month in the fourth quarter and total sales volumes declined by almost 50%. Honda, a key supplier to the Thai passenger car market, only restarted production at its Adutthaya plant at the end of March after more than a five-month shut-down.

Like the automotive industry, the country’s economy also rebounded strongly in the first quarter, after Q4 GDP shrank by 9% year-on-year and by 10.7% quarter-on-quarter. Annualised first-quarter growth is expected to have been much slower, with the country’s productive capacity not yet fully restored.

Full-year GDP growth is widely expected to be around 6%, with growth accelerating as the year progresses – fuelled by flood recovery stimulus policies and recovery in the country’economic output.

Toyota Motor Thailand expects the local vehicle market in 2012 to exceed one million units for the first time, driven by strong pent up demand and recovering output. This equates to growth of at least 25% this year.

First-time buyer stimulus measures introduced last October will also help drive volumes higher, as will the expanding range of locally-made, small “eco-cars”.


Last year’s strong growth momentum was carried through into the first quarter of 2012, with new vehicle sales rising by 10.6% year-on-year to 249,589 units. This followed a record year for Indonesia in 2011, with sales approaching 900,000 units for the first time.

The vehicle market continues to be buoyed by record-low inter-bank interest rates, currently at 5.75%, and by economic growth estimated at around 6.5% in the first quarter. New models, such as full replacement of the Avanza and Xenia – the country’s two best-selling vehicles, have also helped underpin the vehicle market so far this year.

Strong domestic consumption and investment continue to drive the economy forward, although the rate of growth could slow from the second quarter. Key overseas markets remain weak and there is growing uncertainty over government policy, which is beginning to erode the strong consumer and investor confidence.

Uncertainty over whether the government will reduce fuel subsidies, or restrict the use of subsidised fuel, will likely increase over the next few months after the government failed to take decisive action at the end of the first quarter.

Higher minimum down-payments will be required for vehicle financing and house purchase loans from June, as Bank Indonesia tries to prevent excessive borrowing.

The market is widely expected to be flat this year at between 900,000-950,000 units, although the final outcome much depends on the government’s new policy implementation. If introduced, a combination of fuel subsidy cuts and minimum car loan down payments will likely affect the market negatively later this year.


New vehicle sales in Malaysia declined by almost 11% to 138,544 units in the first quarter of 2012, from 155,113 units a year earlier, according to data released by the Malaysian Automotive Association (MAA).

The sharp decline comes after a sluggish end to 2011 and reflects tighter lending since the beginning of the year. Bank Negara introduced minimum down payment requirements on car loans to help curb excessive borrowing.

Procedural changes to the vehicle registration process are also said to have impacted the market negatively in the first quarter. Sales in March declined by over 15% to 53,583, with passenger vehicle sales down by 16.6% to 47,106 units and commercial vehicle sales 4.5% lower at 6,477 units.

The Malaysian economy is expected to expand by around 4.0-4.5% this year, after growing by 5.1% in 2011, with sluggish exports holding back the overall performance. This is expected to be offset in part by strong public and private sector investment.

Bank Negara’s interbank interest rate was held at 3% in March, as caution prevailed following a 25 basis point increase in the previous month. The MAA remains optimistic that the overall vehicle market will expand by 2.4% to 615,000 units this year – citing new model launches and promotional activity, despite the market’s poor recent performance.

  2010 2011 1/3/2011 1/3/2012 % chge
Thailand 800367 794091 238619 277635 16.3
Indonesia 764710 893164 225739 249589 10.6
Malaysia 605156 600123 155165 138544 -10.7
Philippines 170216 162413 41703 40441 -3.1
Vietnam 112224 110938 28261 17891 -36.7
Singapore 47839 35904 8530 8990 5.4
Total 2500512 2596633 698017 733090 5