• Thailand drives growth in Q2
The ASEAN car market gained momentum in the second quarter of this year.

The ASEAN car market gained momentum in the second quarter of this year.

New vehicle sales in southeast Asia's six largest markets picked up momentum in the second quarter of 2018, with sales rising by 7.5% to 846,865 units from 787,773 units in the same period of 2017, according to data collected by AsiaMotorBusiness.com from the mainstream local trade associations.

This compares with growth of just 1.6% in the first quarter, resulting in a 4.5% rise in first-half sales to 1,675,434 units from 1,602,959 units previously.

The second-quarter improvement reflects mainly a sharp upturn in the Thai market from an already strong first quarter. Stronger growth was also reported in Indonesia, while sales in Malaysia recovered after a negative first quarter.

Economic growth has been strong in most countries in South-east Asia so far this year, particularly in Thailand, Vietnam and the Philippines, although the strengthening US dollar has put significant upward pressure on interest rates across the region.

New vehicle sales in the Philippines fell by over 16% to 85,320 units in the second quarter, resulting in a 12.5% drop in first-half sales to 171,357 units from 195,772 units a year earlier.

The decline follows four years of exceptionally strong growth for the market and came as the government began to overhaul of the country's tax system at the beginning of the year.

While economic growth has remained strong this year, at over 6.5%, consumer sentiment has been affected by the new tax system, a falling peso and rising interest rates.

Sales in Vietnam declined by just over 2% year-on-year to 64,502 units in the second quarter of 2018 after a similar decline in the first quarter, despite strong economic growth estimated at over 7% in the first half of the year. This resulted in first-half vehicle sales falling by just under 2% to 123,060 units.

The market has been disrupted by new regulations introduced at the beginning of the year, including stricter product quality and minimum aftersales service standards.

The Vietnamese government also eliminated duties on vehicles imported from other ASEAN countries, increasing expectations that lower import prices will lead to a strong market rebound in the second half of the year. But the new regulations have created significant delays at customs, particularly in the product approval process, and this severely affected import flows this year.

Indonesia

Indonesia's vehicle market gained momentum in the second quarter of 2018, with sales growing by 4.8% year-on-year to 261,859 units based on data released by industry association Gaikindo, resulting in a 3.8% rise in first-half sales to 553,779 units.

The market this year has been driven higher by a rebound in commercial vehicles sales, which began last year after a four-year decline. This segment expanded by over 16% to 129,000 units in the first half, with demand particularly strong for medium and heavy trucks.

Indonesian economic growth has remained sluggish this year, however, with first-half GDP growth estimated at just above 5%. Domestic sentiment has also been weakened by talk of global trade wars and a depreciating rupiah, which the central bank has sought to defend by hiking its benchmark interest rate by 100 basis points over the last three months.

Passenger vehicle sales were just slightly higher in the first half of the year, by 0.5% at 424,800 units, although there was significant churn within the segment. Strong competition from mid-table players such as Mitsubishi and to a lesser extent Suzuki has put significant pressure on Toyota and Honda.

Sales of Mitsubishi and Fuso distributor KTB almost doubled year-on-year to over 100,000 units thanks mainly to strong demand for the Mitsubishi Xpander compact MPV launched a year ago.

By contrast Toyota's sales fell by over 17% to 160,200 units and Honda's were down by almost 18% at 76,700 units.

The local association expects total vehicle sales to reach 1.1 million units this year, just 2% higher than last year, with growth underpinned by regional election spending. But with rising interest rates and a weakening global outlook, the second half of the year could be a struggle.

Thailand

Thai vehicle sales jumped by over 26% year-on-year to 252,057 units in the second quarter, based on wholesale data collected by the Federation of Thai Industries (FTI), with demand driven by strong economic growth and buoyant consumer confidence.

Sales in the first half of the year were more than 19% higher at 489,118 units compared with 409,976 units in the same period last year. The market continues to build on last year's strong rebound after a four-year decline from peak volumes of 1.43 million units in 2012.

The Federation attributes the market's recent strong performance to broad-based economic growth in the country, with rising private sector investment and government spending, buoyant farm prices, rising exports and strong consumer confidence.

Replacement vehicle demand has also increased sharply in the last year, with most owners of vehicles bought under the previous government's first-time buyer incentive programme able to claim tax rebates equivalent to up to 10% of the purchase cost of their vehicles after a five-year lock-in period.

With inflation still well within government targets, Bank of Thailand continues to hold its benchmark interest rate unchanged at a historic low of 1.5%, which should ensure consumer confidence remains high.

The Federation now expects the market to expand to between 960,000-980,000 units this year, up from its earlier forecast of 900,000 units, while some automakers now expect sales to exceed 1 million units.

Malaysia

Malaysia's new vehicle market rebounded in the second quarter of 2018, by 7.3% year-on-year to 154,574 units according to registration data released by the Malaysian Automotive Association (MAA), reversing a 4% decline in the first quarter.

First-half registrations were up by 1.8% at 289,714 units, compared with 284,453 units in the same period of last year, thanks mainly to a more than 28% jump in June – ahead of the annual Hari Raya holidays.

Buyers also rushed into the market after the 6% goods and service tax (GST), introduced just three years ago by the previous government, was scrapped at the beginning of June.

Strong sales are expected to continue in the next two months while the tax holiday lasts, before the old 10% Sales and Services Tax (SST) is re-introduced on 1st September.

Despite reasonably strong economic growth in the country, at 5.4% in the first quarter, the MAA has pared back its full-year market forecast to 585,000 units from 590,000 earlier in the year to reflect weaker sales from September once the higher SST is applied.

Vehicle sales in the ASEAN region by market, 2015-18

2015201620171-6 20171-6 2018% change
Indonesia1013300106270010793005335065537793.8
Thailand79959276878887165040997648911819.3
Malaysia6666745801245766352844532897141.8
Philippines346865452751491200195772171357-12.5
Vietnam208568271833250619125490123060-1.9
Singapore745441066841161485376248406-10
Total310954332428803385552160295916754344.5

Source: www.AsiaMotorBusiness.com from industry sources

Auto market intelligence
from just-auto

• Auto component fitment forecasts
• OEM & tier 1 profiles & factory finder
• Analysis of 30+ auto technologies & more