Summary: A look at OEM developments in Malaysia, the Philippines and Vietnam

Malaysia

Flat market in 2011

Malaysia’s new vehicle market was little changed in the first nine months of 2011, with sales falling by 0.7% to 450,244 units. There has been significant divergence in performances among the vehicle manufacturers during this period, however.

At the top of the table, the country’s second national car company Perodua reported a 10% fall in sales to 127,186 units – due mainly to tight inventories following the supply-chain disruption in Japan in the second quarter. The company is hoping that the launch of the new Myvi in June will help it recover some lost ground in the fourth quarter.

Toyota too reported moderately weaker sales – down by 3% at 674,918 units. Worst hit by the disruption in the second quarter was Honda, which experienced an 18% fall in sales to 27,835 units. The company reported strong sales of its newly-launched Insight hybrid model, after the government cut excise taxes and import duties on such vehicles at the beginning of the year.

Proton looks to strengthen old partnership

The country’s first national car company, Proton, managed to outperform in this flat market environment, with sales rising by 3.4% to 124,439, although it remains some distance away from reclaiming market leadership from Perodua.

After talks over a strategic alliance with Volkswagen collapsed, Proton is now engaged in expanding its alliance with its original and current partner – Mitsubishi Motors . Proton badly needs help with product technology to keep up with strengthening competition in its domestic market.

Ford benefitted from the rollout of the new Thai-made Fiesta , and sales more than trebled to 5,407 units in the first nine months of 2011. Mazda also benefited from strong Mazda 2 sales and the launch of local assembly of the new Mazda 3, with total volumes rising by 35% to 4,323 units.

Vehicle sales in Malaysia by brand, 2009-11

Brand 2009 2010 1-9 2010 1-9 2011 % Change
Perodua  166,736 188,641 141,111 127,186 -9.9
Proton 148,031 157,274 120,331 124,439 3.4
Toyota 82,089 91,568 66,952 64,918 -3
Honda 38,783 44,483 34,104 27,835 -18.4
Nissan Motor 31,493 32,998 25,020 24,031 -4
Mitsubishi Motors 8,372 11,899 8,958 9,102 1.6
Hyundai/Inokom 7,954 10,504 6,524 8,870 36
Naza-Kia 11,948 10,075 8,145 8,547 4.9
Isuzu 5,378 6,144 4,356 6,391 46.7
Ford 1,826 2,857 1,555 5,407 247.7
Suzuki 4,994 6,748 5,027 5,317 5.8
Mercedes-Benz 4,156 5,144 3,867 4,418 14.2
Mazda 1,444 4,325 3,212 4,323 34.6
Volkswagen 885 2,810 1,313 4,189 219
Naza/Peugeot 3,593 2,817 2,064 4,152 101.2
Hino 3,009 4,590 3,269 4,142 26.7
BMW 3,564 4,006 2,919 3,774 29.3
Chery 1,871 3,041 1,241 2,248 81.1
Others  10,779 15,232 13,281 10,955 -17.5
Total 536,905 605,156 453,249 450,244 -0.7

Source: MAA.

Volkswagen last year chose DRB-HICOM over Proton as its local vehicle assembly partner and has since strengthened its distribution operations in the country. DRB-Hicom plans to begin assembly of the VW Passat before the end of 2011 at its plant in Pekan, Malaysia. The company ultimately aims to produce 50,000 cars in Malaysia annually for the regional market.

Peugeot’s Malaysian distributor, Nasim Snd Bhd, ramped up production of the Peugeot 207 range after its launch a year ago and has begun exporting the model to Indonesia, Thailand and other markets in the region.

The company aims to produce 60,000 units of the model during the next five years, with exports expected to account for around 60% of the total. Local content is being increased to reduce costs. Peugeot is also considering producing the 408 model in Malaysia for sales regionally.

Fuji Heavy Industries has reached an agreement with local Tang Chong group to assemble a compact Subaru SUV from October 2012. Around 5,000 units per year will be produced for regional markets.

The Philippines

New vehicle sales in the Philippines fell by 3.2% to 122,785 units in the first nine months of 2011, from record volumes in 2010. Key manufacturers reported tight inventories of some CBU models and also for some parts for locally-assembled vehicles, and this is thought to have held back the market in the first half of the year.

Market leader Toyota reported a 5% decline in sales to 39,234 units, with deliveries moderately lower across most model ranges.

Like in other markets in the region, Honda suffered most from the disruption to supplies in the second quarter. Sales fell by close to 23% to 10,120 units in the first nine months of the year, with the CRV , Civic and City models hit particularly hard.

Further market disruption is expected in the fourth quarter, with significant shortages of product from Thailand likely to hold back sales in the final months of the year. Honda, again, will be the worst affected.

Vehicle sales in the Philippines by brand, 2009-11

Brand 2009 2010 1-9 2010 1-9 2011 % Change
Toyota 46,193 56,855 41,281 39,234 -5
Mitsubishi 23,247 32,422 23,998 24,081 0.3
Hyundai 11,086 20,172 15,575 14,883 -4.4
Honda 17,168 16,604 13,068 10,120 -22.6
Ford 6,142 6,603 4,900 7,129 31
Isuzu 9,213 10,695 7,803 7,136 -8.6
Nissan 7,466 8,691 6,684 6,388 -4.4
KIA 3,761 5,566 4,423 3,783 -14.5
Suzuki 2,627 3,735 2,818 3,020 7.2
Mazda 2,042 3,148 2,277 2,273 0.1
Chevrolet 1,312 2,025 1,424 1,850 29.9
BMW 626 664 519 561 8.1
Mercedes-Benz 508 830 473 498 5.3
Others  1,053 2,257 1,657 1,829 10.4
Total 132,444 170,267 126,900 122,785 -3.2

Source: industry sources.

Ford benefited from the launch of the Fiesta at the end of last year. The company announced plans to shift some export production to Thailand, namely for its Focus model, to help improve regional deliveries.

Toyota announced plans to invest PHP450m (US$10.5m) to improve its assembly facilities in the Philippines and to help increase local content of key models.

The company plans to raise local content of the locally-assembled Innova from the current 20% and the Vios from 25%. Most of the investment will go towards new stamping equipment

Vietnam

Vietnam’s vehicle market has struggled to make headway since peaking at just below 120,000 units in 2009. The local currency has been devalued several times over the last 18 months, inter-bank interest rates are around 14% to combat inflation, and automotive taxation is anything but stable.

Local vehicle assemblers struggle to compete with used imports, particularly in the commercial vehicle sector. Truong Hai has strengthened over the last two years to take market leadership from Toyota. It sells a range of cars and commercial vehicles sourced from Kia Motors and from manufacturers in China.

Its biggest seller is the Kia K-series light truck. Overall sales increased by 33% to 23,413 units in the first nine months of 2011. Toyota has just about kept pace with the overall market, with sales of passenger cars, SUVs and MPVs performing reasonably well — helped by the strength of the brand.

Vehicle sales in Vietnam by brand, 2009-11

Brand 2009 2010 1-9 2010 1-9 2011 % Change
Truong Hai 21,617 26,047 17,607 23,413 33
Toyota 30,109 31,135 21,611 22,106 2.3
GM 14,200 9,685 6,424 7,353 14.5
Ford 8,286 6,475 4,337 6,058 39.7
Vinaxuki 8,680 9,002 7,173 5,786 -19.3
Vinamotor* 15,284 12,274 9040 3229 -64.3
Visuco 2,669 3,242 2,251 3,202 42.2
Mercedes-Benz 3,399 2,827 1,883 1,978 5
Honda 4,215 3,140 2,049 1,893 -7.6
VinaStar 3,666 2,492 1,581 1,595 0.8
Isuzu* 2,997 1,978 1,306 1,159 -11.3
Others  4,,337 3,927 2,918 2,906 -0.4
Total 119,459 112,224 78,180 80,678 3.2

Source: Vietnam Automobile Manufacturers Association.

Ford has competed well with its SUVs sourced from the Philippines and more recently with the Fiesta compact car sourced from Thailand. The company began local assembly of the model in the third quarter and expects its sales to increase further as a result.

GM relies mainly on products from its South Korean unit GMDAT. Its key model is the Cruze, followed by the Lacetti compact car and Spark small car.