• Decline slows as lockdowns are eased
The ASEAN regions vehicle markets were well down on last years pace in the third quarter, but were a big improvement on Q2

The ASEAN region's vehicle markets were well down on last year's pace in the third quarter, but were a big improvement on Q2

Sales of new vehicles in southeast Asia's six largest markets combined declined by almost 24% to 643,365 units in the third quarter of 2020 ( from 842,199 units in the same period of last year), according to data collected exclusively for just-auto. However, the trend during the year shows an improving trend as buyers returned to the market after lockdowns eased.

The Q3 year-on-year drop of 24% follows a 66% decline in the second quarter, when economic activity across the region was severely disrupted by business and social lockdowns to help slow the spread of the COVID-19 pandemic. Regional vehicle sales in the first nine months of the year were down by almost 36% at 1,616,327 units from 2,513,983 units in the same period of last year.

Significant economic restrictions remained in place in most countries throughout the third quarter, including bans on foreign tourist arrivals which continues to have a devastating effect on the region's travel, tourism and hospitality sectors, while weak overseas demand has held back export activity. Central banks have slashed interest rates to historic lows and governments have introduced fiscal measures to help support domestic demand, but it is increasing clear that a full economic recovery will take much longer than first thought.

ASEAN's largest vehicle market in the first nine months of 2020 was Thailand, despite 29% sales decline to 543,219 units from 761,847 units in the same period of last year. While the country successfully brought the COVID-19 outbreak under control much earlier in the year, the economy continues to be severely impacted by weak export demand and a ban on tourism arrivals in particular.

Indonesia was the region's worst performing market in the nine-month period, with sales falling by almost 51% to 372,046 units, while Malaysia saw its sales fall by 23% to 341,489 units.

Vietnam's new vehicle market declined by less than 5% to 69,817 units in the third quarter of 2020, resulting in a drop of just over 21% to 172,537 units in the first nine-months of the year. It replaced the Philippines as South-east Asia's fourth-largest market for the first time. Vietnam has avoided falling into recession this year, helped by pre-emptive action early on to control the spread of the COVID-19 pandemic and the vehicle market is now beginning to stabilise after a 30% decline in the first half of the year.

New vehicle sales in the Philippines dropped by 35% to 62,971 units in the third quarter of 2020 from 93,229 units a year earlier, based on data released by the two main vehicle manufacturers' associations, CAMPI and TMA. After Indonesia, the Philippines is the worst performing market in South-east Asia with sales falling by almost 45% to 148,012 units in the first nine months of 2020.

Thailand

Thailand's new vehicle market shrank by just under 10% to 214,615 units in the third quarter of 2020 from 238,077 units year earlier, based on data compiled by the Federation of Thai Industries, after a drop of more than 50% in the second quarter when large parts of the economy were under lockdown to help control the spread of the COVID-19 pandemic.

The FTI attributes the third quarter improvement to an easing of social and business restrictions, with the pandemic largely under control in the country, as well as to government stimulus measures and new model launches by the main vehicle manufacturers.

Bank of Thailand cut its benchmark interest rate to a historic low of 0.5% in the second quarter to help stimulate the economy, along with government stimulus packages including soft loans and tax relief for small and medium companies, funding for local infrastructure, poverty relief and job creation programmes.

Day-to-day economic activity began to normalise in the third quarter and the GDP decline trend is expected to have slowed significantly after shrinking by over 12% year-on-year in the second quarter and by 6.9% in the first half of the year. Key sectors of the economy remain under significant pressure, however, particularly those dependent on travel and tourism, while investment and exports have begun to stabilise.

New vehicle sales were still down by almost 29% at 543,219 units in the first nine months of the year from 761,847 units a year earlier. The FTI now expects full-year sales to reach 700,000 units in 2020 provided there is not a significant increase in COVID-19 infections, down from 1,007,000 units in 2019. Looking closer at the January-September data, full year sales will likely exceed 750,000 units in 2020.

Indonesia

New vehicle sales in Indonesia continued to fall sharply in the third quarter of 2020, by over 59% to 111,113 units from 272,377 units in the same period of last year, according to member wholesale data compiled by industry association Gaikindo. This followed an almost 90% plunge in the second-quarter, after the government implemented a comprehensive social and economic lockdown in March to help slow the spread of the COVID-19 pandemic.

With infections continuing to rise, business and social restrictions remained in place throughout much of the third quarter, which continued to hold back economic activity in the country. GDP is expected to have remained negative in the third quarter, after shrinking by 5.3% year-on-year in the second quarter. Foreign direct investment rose slightly in the third quarter after declining sharply in the first half of the year, helped by large government projects. Exports remained weak, however, while the travel, tourism and hospitality sectors are still affected by restrictions on international travel.

The Bank of Indonesia cut its benchmark interest rate by 25 basis points to 4.00% in July to help stimulate growth, the eighth consecutive rate cut since early last year. The government has also introduced a number of fiscal and poverty alleviation policies to help mitigate the effects of the pandemic, but their impact so far has been limited.

In the first nine months of 2020 new vehicle sales declined by almost 51% to 372,046 units compared with 753,954 units in the same period of last year, with sales of passenger vehicles falling by almost 52% to 278,240 units while sales of trucks and buses were down by over 47% at 93,806 units.

Toyota reported an almost 55% decline in wholesale volumes to 110,863 units in the nine-month period; followed by Daihatsu with a 48% drop to 69,182 units; Honda 49,688 units (-49%); Suzuki 44,902 units (-37%); and Mitsubishi Motors 38,934 units (-58%).

The short-term outlook for the vehicle market remains negative, despite sales rebounding on a month-on-month basis in the third quarter from extremely depressed second quarter volumes. Most sectors of the economy are operating at well below capacity and consumer and business confidence remains depressed. Continued lockdowns and high infections rates means a full economic recovery will take some time.

Gaikindo last month said it is likely to further lower its already revised 600,000-unit full-year sales forecast for 2020, adding "we'll probably still see the pandemic's impact on vehicle sales next year.

Malaysia

Malaysia's new vehicle market expanded by almost 14% to 166,814 units in the third quarter of 2020 from 146,668 units in the same period of last year, according to registration data released by the Malaysian Automotive Association (MAA), bucking a still very negative regional trend.

This follows a 55% drop in the second quarter to 69,122 units, after the government locked down the economy under its first Movement Control Order (MCO) in mid-March to slow the spread of the COVID-19 pandemic. GDP shrank by over 17% year-on-year in the second quarter as a result, with household consumption plunging by 18.5%, fixed investments down by almost 29% and exports dropping by over 14%.

The economic decline is expected to have slowed significantly in the third quarter, with business and consumer confidence beginning to return. Domestic consumption is expected to have stabilised, helping to support manufacturing output. Malaysia's central bank cut its benchmark interest rate to a historic low of 1.75% from 3.25% in January and the government has introduced a range stimulus measures to help support the domestic economy.

The vehicle market in the third quarter was lifted by the suspension of the vehicle sales tax early in June until the end of the year, which resulted in broad-based price cuts by dealers, as well as by weak year-earlier volumes.

In the first nine months of the year new vehicle sales were down by less than 23% at 341,489 units from 442,985 units a year earlier, with passenger vehicles sales falling by over 23% to 310,008 units and commercial vehicle sales down by 19% at 31,481 units. Perodua's sales fell by almost 19% to 145,012 units in this period; followed by Proton with 5.2% increase to 73,547 units; Honda 34,655 units (-47% ) and Toyota 28,241 units (-21%).

Year-on-year comparisons will get tougher in the fourth quarter, so the strong sales rebound seen in the third quarter will likely run out of steam in the short term.

Vehicle sales in the ASEAN region by market, 2017-2020

2017201820191-9 20191-9 2020% change
Thailand87165010417391007552761847543219-28.7
Indonesia107953411512911030126753954372046-50.7
Malaysia576635598714604287442985341489-22.9
Vietnam250619276817306073219238172537-21.3
Philippines467200401803416637267364148012-44.6
Singapore11614893862891606859539024-43.1
Total33617863563923344559825139831616327-35.7

Source: www.AsiaMotorBusiness.com from industry sources