Growth returns in Q4, but for how long?
New vehicle sales in southeast Asia’s six largest markets expanded by 4.4% to 858,872 units in the fourth quarter of 2015, compared with 822,888 units in the same period of last year, according to compiled exclusively for just-auto by AsiaMotorBusiness.com.
Full-year sales were 3.9% lower at 3,079,678 units in 2015, however, compared with 3,203,256 units in the previous year, as economic growth in the region came under pressure from slowing domestic consumption, depressed commodity prices and weak exports.
The sales decline in the region’s largest market, Indonesia, slowed significantly in the fourth quarter – to just over 9% after an 18% drop the first nine months of the year. This reflects more than anything increasingly depressed year-earlier sales data, however.
The region’s second largest market, Thailand, expanded by 5.2% in the fourth quarter after declining by almost 15% in the first nine months of the year. Buyers rushed into the market in the final months of the year ahead of scheduled increases in excise taxes on key models. The industry remains downbeat about the market’s growth prospects this year, however, reflecting the sluggish domestic economy and the recent tax increases.
Malaysia’s new vehicle market expanded by over 4% in the fourth quarter, helping to reverse a moderate 1.4% decline in the first nine months of the year. Growth came against a backdrop of slowing domestic economic growth, however, and here too the industry expects a decline in sales in 2016 – albeit a moderate one.
The region’s smaller markets performed much better last year, with the Philippines and Vietnam both enjoying continued strong domestic economic growth driven by low interest rates and high levels of investment.
Both markets reached new record highs last year, of 317,000 and 208,568 units respectively. There is still strong momentum in these markets and growth will likely continue in the short term. The strong cyclical sales rebound in Singapore continued this year after many years of decline and this will likely continue in the short term.
New vehicle sales in Indonesia fell by 9.5% year-on-year to 249,181 units in the fourth quarter of 2015, an improvement on the 18% decline reported in the third quarter and the 22% decline in the second quarter. This reflects more than anything progressively weaker year-earlier data, however.
The country’s economy remained under pressure in the fourth quarter, with global commodity prices hurting producers and impacting rural incomes, while high interest rates continued to hold back domestic consumption and with exports falling by almost 20% year-on-year.
Fourth quarter GDP growth is estimated at 4.7%, the same rate of growth for the year as a whole. Bank Indonesia left its benchmark interest rate unchanged for most of last year at 7.5% due to high inflation. But the rate was cut by 25 basis points in January following a dip in the rate of inflation in December, as the central bank looked to underpin weak domestic consumption at the earliest opportunity.
Full year vehicle sales fell by just over 16% to 1,013,300 units in 2015, from 1,208,019 units in the previous year. The medium and heavy truck segment led the market lower, reflecting particularly depressed demand from the mining and plantations sectors.
Passenger vehicle sales declined by an estimated 17% last year, despite the launch of fully-updated best-sellers such as the Toyota Avanza and Innova and Daihatsu Xenia in the final third of the year and a new model from Honda.
Only the small commercial vehicle segment enjoyed relative stability, with combined sales of models such as the Daihatsu Grand Max and Suzuki Carry only slightly lower last year.
The industry is not expecting a significant rebound in vehicle sales this year, with little sign of recovery in the commodity sector and in exports. Further interest rate cuts and higher public spending will likely result in a moderate rise in domestic consumption, however.
Local industry association Gaikindo expects sales this year to rise to between 1.05-1.10 million units, helped by recently-launched models.
The Thai new vehicle market expanded by 5.2% to 245,766 units in the fourth quarter of 2015, from depressed year-earlier sales of 233,716 units, according to data released by the Federation of Thai Industries (FTI).
Market activity increased ahead of the introduction of new excise taxes linked to emissions and fuel-efficiency at the end of 2015, affecting important segments of the market including pickup-based vehicles, SUVs and large cars.
Full-year sales fell by 9.3% to 799,592 units, from 881,832 units in 2014 – the third consecutive year of decline after the market peaked at over 1.4 million units in 2012.
Economic growth remained subdued for most of the year, with annual GDP growth at 2.9% in the third quarter – only slightly up on 2.8% in the second quarter and down from 3.0% in the first quarter.
Full year GDP growth is estimated at just over 3.0%, with economic activity estimated to have increased moderately in the fourth quarter – lifted by continued growth in tourism arrivals and rising private investment.
Domestic consumption remained sluggish, however, while exports are estimated to have declined by around 6% last year due to depressed commodity prices and lower demand in key markets.
Bank of Thailand expects GDP growth to be 3.5% in 2016, helped by further government stimulus measures and continued strong growth in tourism. It expects exports to remain flat, however, partly due to the growth slowdown in China.
The FTI expects the vehicle market to continue to decline in 2016, by up to 6% to 750,000 units, due to the sluggish domestic economy and the recent increases in excise taxes. Toyota is even more downbeat; it expects the market to drop by close to 10% to 720,000 units this year.
Malaysia’s new vehicle market expanded by just over 4% to 181,286 units in the fourth quarter of 2015, helping to reverse a weak first-half of the year which saw the market decline sharply following the introduction of the new goods and sales tax (GST) at the end of March.
Full-year sales were flat at 666,674 units in 2015 compared with 666,465 units in 2014, according to data released by the Malaysian Automotive Association (MAA).
GDP growth has slowed progressively over the last year, from 5.6% in the first quarter of 2015 to 4.9% in the second quarter and 4.7% in the third quarter. Full-year GDP growth is expected to have dropped to below 5% in 2015, from over 6% in 2014.
Domestic consumption, both public and private, continued to slow in the second half of the year, holding back overall economic growth. Exports are estimated to have declined by over 10% last year in the second half of the year, while public and private investment picked up in the same period.
Domestic confidence has been impacted by the sharp depreciation of the ringgit against the US dollar since last year. Bank Negara overnight lending rate has remained unchanged at 3.25% since mid-2015 due to high inflation, but the central bank took measures to boost bank liquidity in January.
The MAA expects a moderate decline in total vehicle sales in 2016, of around 2.5% to 650,000 units, reflecting both the domestic and global growth slowdown. It cited falling crude oil prices and slowing growth in China as key reasons for its negative forecast.
Vehicle sales in the ASEAN region by market, 2012-15