The fourth quarter sales data is in and 2014 saw vehicle sales fall by almost 10% in the ASEAN region. Tony Pugliese analyses the results in major markets across the region and considers prospects for 2015.
Overview: Sales decline in Indonesia and Thailand in Q4
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New vehicle sales in south-east Asia’s six main markets combined declined by 6.7% to 819,854 units in the fourth quarter of 2014, reflecting sharply lower sales in the region’s two main markets – Indonesia and Thailand.
The annual rate of decline was slower than the -10.5% seen in the third quarter, despite a sharp deterioration in the Indonesian market, reflecting already weak year earlier sales in Thailand and a pick up in sales in Malaysia.
Full-year sales across the region were 9.7% lower at 3,203,256 units, compared with a record 3,547,521 units sold in 2013.
After several years of strong growth, the new vehicle market in Indonesia turned negative in the second half – reversing the moderate growth enjoyed in the first six months of 2014. Economic growth slowed significantly during the year and consumer and business confidence slowly ebbed. Full-year sales fell by just 1.8% to 1,208,019 units, however, making Indonesia by far the largest vehicle market in South-east Asia last year.
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By GlobalDataSales in Thailand declined by close to 20% to 233,716 in the fourth quarter, compared with already depressed year-earlier sales of 290,880 units. This brought full-year sales to 881,832 units – down by a third compared with 2013.
While sales are expected to recover moderately in 2015, it would take an extreme economic event in Indonesia for Thailand to regain its position as south-east Asia’s largest vehicle market. Thailand remains the region’s largest producer of vehicles, however, even after a 23% decline in output to 1.88 million units last year.
South-east Asia’s smaller markets were all positive in the fourth quarter and year-to-date, with strong economic growth in Malaysia, the Philippines and Vietnam driving sales to new record highs. Singapore too enjoyed a strong fourth quarter despite a slowdown in GDP growth.
Sales in Malaysia rose by 1.6% to 666,465 units in 2014, although the industry remains cautious about the outlook for demand in the short term, especially in the first half of 2015 with the new goods and service tax scheduled to be introduced in April.
Economic growth in the Philippines has moderated since hitting peaks of close to 8% in 2013. Nevertheless, the vehicle market continued to expand strongly last year, by over 27% to a record 270,372 units. Further sales growth is forecast for this year, reflecting low vehicle penetration rates in the country, low interest rates and high consumer confidence.
Vehicle sales in Vietnam increased by 38% to 133,588 units in 2014, as the economy continued to recover from the high inflation years of 2011 and 2012. Here too, vehicle penetration rates are extremely low. Low interest rates and improving liquidity in the domestic economy are expected to continue to drive the vehicle market forward in 2015.
Indonesia
New vehicle sales in Indonesia fell sharply in the fourth-quarter, by 14.5% to 275,076 units after a 5% decline in the third quarter, with growing economic uncertainty turning businesses and consumers more cautious.
Vehicle sales in the fourth-quarter were more comparable with year-earlier data in that both quarters contained sales of low-cost green cars (LCGCs), which where launched at the end of the third-quarter of 2013.
Full-year sales fell by 1.8% to 1,208,019 units, from 1,229,901 units a year earlier, with a positive first-half more than offset by an increasingly weak second half of the year.
Sales of LCGCs were 236% higher at 172,120 units, compared with 51,190 units sold in the final four months of 2013. This offset in most part a 14.6% drop sales of other light passenger vehicle sales to 707,341 units and a 6.2% decline in commercial vehicle sales to 328,558 units.
GDP growth is estimated to have dropped to below 5% in the fourth-quarter, dragging down full-year growth to just under 5.1%. Widely anticipated fuel price hikes, averaging around 33%, were implemented in November – shortly after Joko Widodo’s inauguration as the country’s new President.
The benchmark interest rate also was hiked in November, by 25 basis points to 7.75%, in anticipation of the inevitable jump in inflation.
The sharp fall in oil prices in recent months has allowed the government to roll back most of last November’s fuel price increases, to the relief of the country’s growing number of middle-class households.
With economic growth this year unlikely to be significantly better than last year, the domestic vehicle market is likely to drift lower. There is scope for interest rate cuts later in the year, which would improve the outlook for the domestic economy and vehicle sales.
Thailand
New vehicle sales in Thailand declined by almost 20% in the fourth quarter to 233,716 units, compared with already depressed year-earlier sales of 290,880 units, according to the Federation of Thai Industries (FTI).
This brought to an end a dismal year for the country’s automotive industry, in which political upheaval is estimated to have dragged annual economic growth down to below 1%. Domestic consumption also was affected by high household debt and low agricultural and commodity prices.
Domestic confidence evaporated as the political unrest intensified in the first half of the year – which culminated in a military coup in May. Exports declined slightly last year, driven lower by weakness in key market in the Asia-Pacific region and in Europe, as well as by depressed commodity prices.
Public spending was held back by political turmoil and ultimately a change of government, while the all-important tourism sector was affected by lower arrivals throughout most of the year.
Full-year vehicle sales fell by 33.4% to 881,832 units in 2014, from 1,325,079 units in the previous year. The market last year continued to be negatively affected by the withdrawal of first-time buyer incentives at the end of 2012. But all segments of the vehicle market performed poorly, reflecting the breadth of the economic slowdown.
The FTI expects vehicle sales in 2015 to bounce back to around 1 million units, as the domestic economy recovers from last year’s near-recession. Toyota is more cautious, forecasting sales to rise by just over 4% to 920,000 units.
Malaysia
Malaysia’s new vehicle market finished the year on a high, with fourth-quarter sales rising by 3.8% to 174,160 units compared with 167,825 units a year earlier, according to the Malaysian Automotive Association (MAA).
Full-year sales increased by 1.6% to 666,465 units in 2014, from 655,795 units previously. Passenger vehicle sales grew by 2% to 588,341 units, while commercial vehicles sales fell by 1.3% to 78,124 units.
Vehicle sales in the ASEAN region by market, 2011-14
| 2011 | 2012 | 2013 | 2014 | %ch | |
| Indonesia | 893,164 | 1,116,230 | 1,229,901 | 1,208,019 | -1.8 |
| Thailand | 794,091 | 1,436,335 | 1,325,079 | 881,832 | -33.4 |
| Malaysia | 600,123 | 627,753 | 655,793 | 666,465 | 1.6 |
| Philippines | 162,413 | 182,779 | 212,682 | 270,372 | 27.1 |
| Vietnam | 110,938 | 80,652 | 96,692 | 133,588 | 38.2 |
| Singapore | 35,904 | 33,914 | 27,374 | 42,980 | 57 |
| Total | 2,596,633 | 3,477,663 | 3,547,521 | 3,203,256 | -9.7 |
Sources: www.AsiaMotorBusiness.com from industry sources
