• Sales in Indonesia sharply lower
A sharp market decline in Indonesia dragged the whole ASEAN regions growth rate down in Q1

A sharp market decline in Indonesia dragged the whole ASEAN region's growth rate down in Q1

New vehicle sales in southeast Asia's six largest markets combined increased by 1.9% to 853,383 units in the first quarter of 2019 from 837,481 units in the same period of last year, according to data collected exclusively for just-auto from local trade associations and government departments.

This represents a marked slowdown from the 6.0% growth seen in the whole of last year and reflects a sharp decline in one of the region's largest markets. Sales in Indonesia fell by 13% to 253,863 units in the first three months of the year, reflecting sluggish economic growth and a degree of uncertainty ahead of the presidential and parliamentary elections held in April.

Thailand overtook Indonesia once again as the ASEAN region's largest vehicle market in the first quarter after its sales rose by over 11% to 263,549 units, driven by rising incomes and strong overall domestic consumption growth. This was a slower rate of growth compared with last year's almost 20% volume increase, however.

Malaysia's vehicle market recovered from a 4% decline in the fourth quarter of 2018 with sales rising by close to 6% to 143,064 units in the first quarter, helped by the introduction of new SUV models by the country's two main national car companies. Economic growth remains sluggish, however, mainly reflecting weak export demand.

New vehicle sales in the Philippines were just slightly higher in the first quarter of 2019 at an estimated 95,337 units from 94,884 units a year earlier. This includes data from members of the main local industry associations as well as separate data from Hyundai Motor. The local automotive industry is becoming increasingly optimistic that the market has turned a corner from last year's decline, which it blames largely on major changes to the country's taxation system introduced at the beginning of 2018. After a sharp decline in January, vehicle sales rebounded strongly in February and March. The local currency has also stabilised after last year's sharp volatility and inflation has eased in recent months, leaving room for interest rate cuts if needed.

Vietnam's vehicle market continued to recover in the first quarter, with sales rising by 25% at 73,297 units from 58,541 units from weak year-earlier sales, when the introduction of new regulations had a severe impact on vehicle imports.  The Vietnamese economy remains strong, with GDP growth estimated at 6.8% year-on-year in the first quarter, though moderately slower compared with 7.1% in the fourth quarter of 2018.

Most of the vehicle market growth was reported in the passenger vehicle and pickup truck segments, with other segments of the vehicle market continued to post sharp losses. The market recovery is widely expected to continue this year as the industry deals with outstanding regulatory issues in the country.

Thailand

New vehicle sales in Thailand continued to grow in the first quarter of 2019, by over 11% to 263,549 units from 237,093 units a year earlier, according to wholesale data compiled by the Federation of Thai Industries (FTI).

This follows an almost 20% sales rise to 1,041,739 units last year, with demand driven by strong domestic economic growth, rising incomes and low interest rates, as well as new model launches. GDP growth last year was 4.1%, following growth of 4.0% in 2017, underpinned by strong public and private investment growth.

The market was driving higher by strong demand for passenger cars in the first quarter, with sales rising by close to 14% to 102,620 units, while sales of pickup-based vehicles sales rose by over 12% to 132,705 units. Sales of SUVs and other commercial vehicles were weaker, however.

Market leader Toyota made the strongest gains in the first quarter, with sales jumping by over 34% to 86,131 units; while Isuzu's sales rose by just 1.4% to 44,922 units; Honda 30,004 units (+5.5%); and Mitsubishi Motors 23,991 (+15.9%).

As the first quarter unfolded, the Thai vehicle industry became more upbeat about the outlook for the market this year. The FTI at the beginning of the year forecast a 4% decline to 1 million units in 2019, while some individual vehicle manufacturers now expect a flat to moderately positive outcome for the market after strong gains in the previous two years.

Indonesia

New vehicle sales in Indonesia declined by 13% to 253,863 units in the first quarter of 2019 from 291,920 in the same period of last year, according to wholesale data compiled by industry association Gaikindo.

This decline follows moderate sales growth in the last two years, driven mainly by a strong rebound in commercial vehicle demand after several years of decline. Passenger vehicle sales growth was more subdued in this period, with demand for new models offsetting sharply weaker sales of older models.

Economic growth has remained within a narrow range at just over 5% in the last few years, despite substantial infrastructure investment and higher government spending. Consumer spending growth has been lacklustre and was further undermined by a series of rate hikes last year, with the central bank's benchmark rate lifted from 4.25% to 6.0% currently.

In the first quarter of 2019, sales of both passenger vehicles and commercial vehicles deteriorated significantly – each by around 13% to 192,368 units and 61,495 units respectively. Uncertainty generated by the presidential and parliamentary elections held in April may be partly to blame and we may well see a moderate sales rebound in the second quarter. But underlying demand for vehicles looks to have weakened significantly in the short term.

Toyota sold a total of 77,266 vehicles in the first quarter, down by 8.6% year-on-year, while Daihatsu's sales fell by 1.8% to 50,699 units; Mitsubishi Motors 35,580 units (-13.9%); Honda 28,845 units (-20.4%); and Suzuki 22,869 units (-29.3%).

The automotive association expects a moderate sales decline this year to 1.1 million units. Stronger economic growth will be needed to drive the new vehicle market significantly higher from recent levels, along with interest rate cuts and replacements for some key models.

Malaysia

Malaysia's new vehicle market expanded by almost 6% to 143,064 units in the first quarter of 2019 from 135,190 units in the same period a year earlier, according to registration data released by the Malaysian Automotive Association (MAA).

This follows a moderate recovery last year from a two-year decline, with sales rising by 3.8% to 598,714 units despite a further slowdown in economic growth to 4.7% from 5.9% growth in 2017. The central bank has kept its benchmark rate unchanged at 3.25% since the end of 2017, but cuts may follow if the currency is seen to have stabilised.

The market in the first quarter was driven higher by strong demand for passenger vehicles, particularly newly launched SUVs by Perodua and Proton, with overall volumes rising by 8.3% at 131,114 units from 121,060 units a year earlier.

Commercial vehicle sales continued to suffer from weak business sentiment amid sluggish exports and slowing growth in private consumption, government spending and fixed investment in the fourth quarter of 2018. New registrations declined by 15% to 11,950 units in the first quarter from 14,050 units previously.

The MAA expects the overall vehicle market to be just slightly positive in 2019, with recent new models launches helping to underpin demand.

Vehicle sales in the ASEAN region by market, 2016-19

201620172018Q1 2018Q1 2019change
Thailand768788871650104173923709326354911.2
Indonesia106270010795341151291291920253863-13
Malaysia5801245766355987141351901430645.8
Philippines40254246720040150094884953370.5
Vietnam271833250619276817585417329725.2
Singapore10668411614893862198532427322.3
Total3242880336178635639238374818533831.9

Source: www.AsiaMotorBusiness.com from industry sources

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