The third quarter saw a mixed picture across the ASEAN region

The third quarter saw a mixed picture across the ASEAN region

New vehicle sales in the ASEAN region of south-east Asia declined in the third quarter according to exclusive analysis produced for just-auto. A sharp drop in sales in Thailand was mainly responsible for the Q3 reversal. Nevertheless, sales for the first nine months remain ahead of last year.

New vehicle sales in the ASEAN region’s six main markets declined by 5.4% to 856,998 units in the third quarter, from 906,233 units a year earlier, according to data compiled by Tony Pugliese for just-auto.

Nevertheless, sales in the first nine months of the year were up by just 7.3% at 2,668,830 units, compared with annual growth of 14.6% in the first half of the year. 

Regional sales were dragged lower mainly by a sharp drop in demand in Thailand, the region’s largest market, as deliveries of vehicles sold under the government’s first-time buyer scheme dried up and year-on-year comparisons got much tougher.

Most other markets in the region remained positive in the third quarter, despite growing uncertainty created by speculation over the US Federal Reserve’s fiscal “tapering” policies, which caused significant stock and currency market volatility across the region over the summer. 

While stock markets in the region have recovered some of their losses in the last month, regional currencies generally remain much weaker against the US dollar.  This is particularly the case in Indonesia, where local factors such as cuts in fuel subsidies pushed up inflation and put additional pressure on the local currency. The impact on the vehicle market will become clearer in the fourth quarter. 

The Malaysian market rebounded strongly from the second-quarter dip, with economic growth also expected to strengthen in the second half of the year. Consumers in the Philippines continued to enjoy record-low interest rates, which have underpinned domestic economic growth and vehicle sales for some time. 

Among the smaller markets, Vietnam’s recovery continued following a series of interest rate cuts over the last year, with third quarter sales rising by almost 15% to 23,355 units. New registrations in Singapore continued to drift lower as government policies continued to favour public transport.

Thailand

New vehicle sales in Thailand fell by 25% to 295,153 units in the third quarter as deliveries of vehicles sold under the government’s first-time buyers incentive programme tapered off. Sales of 393,880 units achieved in the comparable year-earlier period were artificially boosted by the award of government tax rebates of up to THB100,000 per car. 

Sales in the first nine months of 2013 were 3.6% higher at 1,034,199 units, compared with 998,717 units a year earlier, reflecting a strong first-half performance as deliveries of orders placed last year remained strong most of the six-month period.

In the broader economy, annualised GDP growth dipped sharply in the second quarter, to 2.8% from 5.4% in the first quarter. This follows above trend growth throughout 2012 due in large part to post-2011 flood recovery measures introduced by the government.

Second half GDP is not expected to improve significantly from the second quarter, with full-year GDP growth widely expected to come in at around 4%. Domestic consumption is expected to remain sluggish, despite recent central bank benchmark rate cuts to 2.5%. Exports are also not expected to improve significantly in the second half.

For the vehicle market, the outlook for the rest of the year is a continued year-on-year decline, albeit from very high year-earlier levels. Full-year sales are projected to come in at 1.32m units, which would make 2013 the second-best year ever and second only to the incentive-boosted market last year. 

Indonesia

New vehicle sales in Indonesia grew by 9% to 306,344 units in the third quarter, from 281,056 units a year earlier, despite some strong economic headwinds developing during the quarter.

The local currency has come under strong selling pressure since the second quarter due to a combination of local and international factors. In the third quarter alone the rupiah depreciated by 15% against the US dollar, as inflation jumped following cuts in fuel subsidies in June and also due to broad-based international currency flows.

The central bank has increased interest rates by 150 basis points to 7.25% since June to help defend the rupiah and contain inflation, while the local stock market lost 20% of its value before staging a partial recovery. 

Third-quarter annual GDP growth is expected to continue to slide, from 5.8% in the second quarter and 6% in the first quarter. Foreign direct investment and exports had already slowed in the first half of 2013 and household consumption is expected to weaken in the third and fourth quarters.

Vehicle sales remain at record levels, however, with the market expanding by over 11% to 908,279 units in first nine months of the year. The recent interest rate increases are expected to weigh on the market from the fourth quarter, while vehicle prices have been hiked significantly in the last two months. 

While underlying demand for vehicles remains high, the entry of the Toyota and Daihatsu’s low-cost green cars (LCGC) into the market in September could prove to be very timely.

Malaysia

Malaysia’s new vehicle market rebounded in the third quarter, by 11% to 174,480 units from 157,202 in the same period of last year. Sales had declined by over 4% in the second quarter, with political uncertainty surrounding the May elections and constant speculation regarding tax revisions triggering a wave of price cuts prompting buyers to delay purchases.

Sales in the first nine months of 2013 were 6.4% higher at 487,968 units, from 458,471 units a year earlier, with the market remains on course for a new record year for sales.

GDP growth is broadly expected to grow stronger in the second half of the year, with full-year growth forecast at around 4.7-5.0%, from 4.2% in the first half. This would imply growth of up to 5.5% in the second half of the year, helped by an improvement in the country’s export performance.

The central bank’s benchmark interest rate has remained unchanged at 3%, with domestic consumption remaining reasonably steady despite the recent global financial market turmoil.

Full-year sales are projected to come in at around 640,000 units, helped by increased promotional activity including discounting. New models, including the recent launch of the Toyota Vios passenger car, should help underpin the market in the final quarter.

Vehicle sales in the ASEAN region by market, 2010-13





  2010 2011 2012 Jan-Sept 2012 Jan-Sept 2013 % chg
Thailand 800,367 794,091 1,436,335 998,717 1,034,199 3.6
Indonesia 764,710 893,164 1,116,230 816,317 908,279 11.3
Malaysia 605,156 600,123 627,753 458,471 487,968 6.4
Philippines 170,216 162,413 182,779 131,668 148,381 12.7
Vietnam 112,224 110,938 82,416 56,046 67,326 20.1
Singapore 47,839 35,904 33,914 25,641 22,677 -11.6
Total 2,500,512 2,596,633 3,479,427 2,486,860 2,668,830 7.3
Sources: www.AsiaMotorBusiness.com from industry sources.