Sales growth slows in Q2
New vehicle sales in the ASEAN region’s six main markets grew by just 4.9% to 888,240 units in the second quarter of 2013, from 847,105 units a year earlier, according to data compiled by AsiaMotorBusiness.com from various industry sources.
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First-half regional sales increased by close to 16% to 1.83m units, from 1.58m units a year earlier, however, thanks mainly to the 28% growth reported in the first quarter.
The second-quarter slowdown reflects tighter lending in Indonesia, progress towards market normalisation in Thailand following the expiry of government incentives, and policy uncertainty in Malaysia.
First-quarter regional growth also was abnormally high, flattered by unusually weak year earlier data in Thailand and elsewhere, when supply of pickup trucks and passenger cars was disrupted by floods. This was less of an issue in the second quarter of 2012.
Overall economic growth in the region weakened in the second quarter, with investment growth and exports slowing and with declining commodity prices affecting activity in the plantations and mining sectors.
Sales growth in the Philippines also slowed sharply in the second quarter, to 8.4% year-on-year compared with first quarter growth of close to 22%. This follows three years of high sales volumes thanks to record low interest rates.
Vehicle sales in Vietnam rebounded strongly in the second quarter, by close to 45% year-on-year to 24,946 units, reflecting a series of interest rate cuts over the last year and improving access to credit. Automotive taxation remains very high, however, which puts new vehicles out of the reach for many and encourages imports of used vehicles. First-half sales grew by over 23% to 43,971 units.
Thailand
New vehicle sales in Thailand grew by just 5.1% year-on-year to 344,053 units in the second quarter, compared with 48% and 327,202 units respectively in the first quarter, as the market began to normalise after being artificially lifted by last year’s first-time buyer incentives.
Although the scheme expired at the end of 2012, vehicle manufacturers were still fulfilling orders for subsidized vehicles throughout the second quarter of this year, albeit at a diminishing rate. Vehicles costing less than THB1m, comprising mainly pickup trucks and small cars, qualified for the programme.
The scheme provided a significant boost to the market in the second quarter, helping to lift first-half sales by just over 25% to a record 756,733 units. First-half sales were also flattered by weak year-earlier data when supply was disrupted by floods. Honda, for example, was unable to produce cars in Thailand for most of the first half of 2012.
Thai annual GDP growth slowed significantly in the second quarter, to an estimated 4% from 5.4% the first quarter. Export and private investment growth has weakened significantly, while the agricultural sector continues to suffer from low prices.
Full-year GDP growth rates have been broadly revised down, reflecting weak global demand and depressed commodity prices. Bank of Thailand’s benchmark interest rate, at an expansionary 2.5%, continues to fuel domestic consumer demand, however, and the tourism sector is also showing strong growth.
New vehicle sales are expected to weaken in the second half of the year, as the orders from last year’s incentives dry up, as year-earlier comparisons get tougher and as some sectors of the economy continue to weaken.
Indonesia
Growth in Indonesia’s new vehicle market slowed to 7.1% year-on-year in the second quarter of 2013, to 306,023 units, compared with 18.6% growth in the first quarter, after the government extended policies designed to slow growth in consumer borrowing.
First-half sales increased by a respectable 12.5% to a new record high of 601,935 units, however, which follows a 25% jump in sales in 2012 to a record 1.16 million units. Strong growth in the domestic economy has been fuelled by low interest rates and high levels of domestic and inward investment.
Bank of Indonesia at the end of 2012 extended minimum down-payment requirements of 30% on property and vehicle loans to all banks. This so far has had only a moderate effect on the market, with vehicle manufacturers pushing high volumes onto dealers and driving aggressive sales campaigns.
The slower growth in the second quarter also reflects uncertainty following government delays in introducing its Low Cost Green Car (LCGC) policy and expectations of higher fuel prices.
GDP in the second quarter is estimated to have grown by a lower than expected 5.9%, due to falling commodity prices, weak export demand and efforts by the government to curb consumer borrowing.
Economic growth is expected to moderate further in the second half of 2013, with benchmark interest rates having increased to 6.5%, from 5.5% earlier in the year. The last increase, of 50 basis points in June, came in response to a sharp increase in subsidised fuel prices, which is fuelling inflation. This has also accelerated the decline of the rupiah against the US dollar.
Vehicle market growth is expected to slow further in the second half of the year, as year-on-year comparisons get tougher and as tighter borrowing conditions take their toll on consumer spending.
Buyers are also expected to turn increasingly to the expanding range of small energy- efficient cars coming on to the market, reflecting higher fuel prices and lower tax rates once the government completes the introduction of its LCGC policy.
Malaysia
Malaysia’s new vehicle market declined by 4.2% year-on-year to 155,824 units in the second quarter, reflecting increased political uncertainty surrounding the May general elections. Widespread rumours and informal statements issued by government officials raised expectations of imminent cuts in car prices, with buyers believed to have held back purchases in the second quarter.
A strong first quarter, when sales rose by close to 14% to 157,664 units, ensured that first-half sales remained positive. Cumulative sales for the six-month period rose by 4.1% year-on-year to a record 313,488 units, according to data released by the Malaysian Automotive Association (MAA).
Economic growth is estimated to have exceeded 5% in the second quarter, and the expectation is for further similar growth in the second half of the year. While the export sector remains weak, domestic growth continues to be fuelled by low interest rates (unchanged at 3%) and buoyant consumer sentiment.
The MAA expects vehicle sales to reach 640,000 units this year, an increase of just over 2% on last year’s record 627,753 units. Year-on-year comparisons will get progressively tougher as the year plays out, with growth expected to slow as the year unfolds. Lower car prices would help stimulate additional buying, however.
Vehicle sales in the ASEAN region by market, 2010-13
|
|
2010 |
2011 |
2012 |
1-6 2012 |
1-6 2013 |
% chge |
|
800,367 |
794,091 |
1,436,335 |
604,837 |
756,733 |
25.1 |
|
|
Indonesia |
764,710 |
893,164 |
1,116,230 |
535,261 |
601,935 |
12.5 |
|
Malaysia |
605,156 |
600,123 |
627,753 |
301,269 |
313,488 |
4.1 |
|
Philippines |
170,216 |
162,413 |
182,779 |
85,625 |
98,218 |
14.7 |
|
Vietnam |
112,224 |
110,938 |
82,416 |
35,705 |
43,971 |
23.2 |
|
Singapore |
47,839 |
35,904 |
33,914 |
17,930 |
15,174 |
15.4 |
|
Total |
2,500,512 |
2,596,633 |
3,479,427 |
1,580,627 |
1,829,519 |
15.7 |
Sources: www.AsiaMotorBusiness.com from industry sources.
