ASEAN region smaller markets were the main engine of regional vehicle sales growth in 2016

Vietnam and the Philippines were important ASEAN volume growth markets in 2016

Vietnam and the Philippines were important ASEAN volume growth markets in 2016

New vehicle sales in southeast Asia's six largest markets are estimated to have risen by 4.7% to 947,241 units in the fourth quarter of 2016, from 904,504 units in the same period of the previous year, according to data exclusively provided to just-auto by AsiaMotorBusiness.com.

This resulted in a 4.2% rise in full-year sales to an estimated 3,240,180 units, from 3,109,543 in the previous year – including sales estimates for December in Indonesia. The region's smallest markets enjoyed the strongest growth last year, led by Singapore which benefited from low registration taxes.

The region's largest vehicle market, Indonesia, continued to recover from a two year slump with fourth quarter sales estimated to have increased by over 11%. The market expanded by an estimated 4.6% to 1.06 million units in 2016, driven by interest rate cuts by the central bank and new model launches.

Sales in Thailand fell sharply in the fourth quarter following the sad news of the loss of King Bhumibol Adulyadej in October. Business activity slowed significantly as the country went into mourning. After a moderate recovery earlier in the year, the Thai vehicle market declined by close to 14% in the fourth quarter, resulting in an almost 4% drop in full-year sales.

Malaysia's new vehicle market also continued to decline in the fourth quarter, by close to 11%, reflecting sluggish economic activity in the country. Full-year sales were 13% lower at 580,124 units, with the market looking somewhat saturated after eight years of almost uninterrupted growth.

The region's smaller markets continued to perform strongly in the fourth quarter, with low interest rates and investment supporting strong domestic economic growth. The Philippine vehicle market expanded by over 30% to 452,751 units last year, bringing it a big step closer to the region's leading markets.

Sales in Vietnam also expanded by over 30% last year, to close to 272,000 units, while in Singapore the market continued to enjoy a strong cyclical rebound driven by low registration taxes.

Indonesia

Indonesia's new vehicle market continued to recover strongly in the fourth quarter, with sales estimated to have risen by over 11% to 276,900 units from 248,600 units a year earlier.

Industry Association Gaikindo has yet to release its December wholesale data, so the fourth-quarter growth rate is based on October and November data.

Full-year sales are estimated to have expanded by 4.6% to 1,060,000 units in 2016, from 1,013,300 units in 2015, with the market beginning to recover from a two-year slump in the second quarter of the year.

The country's economy looks to have expanded by just over 5% last year, ahead of the release of official data, driven mainly by strong domestic consumption growth.

The vehicle market has responded strongly to a series of interest rate cuts by the central bank, with its benchmark rate falling from 7.25% at the beginning of 2016 to 4.75% currently, as well as to important new model launches from the country's leading automotive brands.

In the second half of 2015 Toyota launched replacements for its popular Innova and Avanza MPVs and the new generation Fortuner full-size SUV followed in early 2016. In the third quarter of last year, Toyota also introduced a new compact MPV, the Sienta, and a 7-seater variant of its Agya low-cost green car (LCGC) – the Cayla.

In the last year Daihatsu also replaced its Xenia MPV and introduced the Sigra - its version of the Cayla, while Honda launched the popular BR-V compact MPV at the beginning of 2016.

Thailand

New vehicle sales in Thailand fell by 13.7% to 212,388 units in the fourth quarter of 2016, from 245,992 units a year earlier, based on wholesale data collected by the Federation of Thai Industries.

The sharp decline brought to an abrupt end the tentative recovery seen in the previous two quarters, after three years of continuous sales declines. The Thai vehicle market peaked at 1.44 million units in 2012, driven by the previous government's first-time buyer incentive programme.

The loss of King Bhumibol Adulyadej last October hurt consumer sentiment and reduced overall domestic business activity. Last year's GDP growth is estimated at around 3.2%, with strongest growth seen in the first half of the year.

Full-year vehicle sales declined by 3.9% to 768,788 units, making 2016 the market's fourth year of consecutive decline. The all-important pickup truck segment expanded by 1.4% to 394,127 units last year, while passenger vehicle sales continued to struggle.

The industry overall expects a moderate recovery in sales in 2017, with forecasts varying between 4% and 8% volume growth. The market will benefit from continued low interest rates and also the end of the five-year lockup period for many first-time buyers. This means they will be allowed to resell their vehicles without foregoing the 10% tax rebate under the incentive programme.

Malaysia

Malaysia's new vehicle market continued to decline sharply in the fourth quarter of 2016, by 10.8% to 161,691 units from 181,185 in the same period of the previous year, according to data released by the Malaysian Automotive Association (MAA).

Full-year sales fell by 13% to 580,124 units from peak volumes of 666,674 units in the previous year – the culmination of eight years of almost uninterrupted growth.

Annual GDP growth picked up in the third quarter, to 4.3% from 4.0% in the second quarter – driven by strong domestic consumption growth. This momentum is expected to have been carried through into the fourth quarter, helped by an uptick in exports.

Full-year GDP growth is expected to come in at around 4.2%, sharply lower than the 5.0% growth in the previous year and 6.0% growth in 2014.

The MAA expects only a slight improvement in sales in 2017, to just 590,000 units. Government institutes expect economic growth to improve only slightly this year, to around 4.5%, with the weak currency and an increasingly uncertain global economic outlook expected to affect domestic sentiment. Also, the threat of inflation will limit the potential for interest rate cuts.

Vehicle sales in the ASEAN region by market, 2013-16
2013201420152016% change
Indonesia 1,229,9011,208,0191,013,3001,060,0004.6
Thailand 1,325,079881,832799,592768,788-3.9
Malaysia 655,793666,465666,674580,124-13
Philippines 212,682270,372346,865452,75130.5
Vietnam 96,692133,588208,568271,83330.3
Singapore 27,37442,98074,544106,68443.1
Total3,547,5213,203,2563,109,5433,240,1804.2

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