Sales of new vehicles in southeast Asia’s six largest markets combined continued to decline in the fourth of 2019, by 6.0% to an estimated 904,000 units from 962,100 in the same period of the previous year, according to data collected exclusively for just-auto from local industry sources including vehicle manufacturers, trade associations and government departments.

Over the full year, regional sales declined by 3.3% to 3,445,598 units from 3,563,923 units in 2018, reflecting mainly lower deliveries in the region’s two largest markets – Indonesia and Thailand. Economic growth slowed sharply in most Asean countries last year, largely due to falling exports, prompting central banks to cut interest rates aggressively to support domestic consumption. The only exception was Vietnam, which enjoyed strong economic growth throughout last year.

The recent outbreak of the coronavirus in China has added significant uncertainty to an already challenging regional outlook for 2020. The vehicle markets of Thailand and Indonesia were already under pressure last year and the negative trend looks likely to continue in 2020. Exports from the region have already been affected by China’s prolonged Lunar New Year shutdown, while the region’s tourism industries are already suffering from travel bans and restrictions on Chinese visitors. If the outbreak is not brought under control quickly, the economic implications could be much more far-reaching. 

Indonesia was the region’s worst-performing vehicle market in 2019, with sales falling by over 10% to 1,030,126 units. Economic growth remained sluggish at just over 5% last year, reflecting declining exports and sluggish domestic consumption despite a series of interest rate cuts during the year. Further interest rate cuts are expected in 2020 to stimulate domestic growth.

The vehicle market in Thailand turned negative in the second half of the year after three years of mostly strong growth. Full-year sales declined by 3.3% to 1,007,552 units as GDP growth plunged to an estimated 2.5% from 4.1% in 2018. Sales in Malaysia were slightly higher over the full year, by just under 1% at 604,287 units, helped by a strong rebound in the fourth quarter.

The Philippines new vehicle market continued its slow recovery in the fourth quarter, with sales rising by 1.5% to 116,274 units, resulting in a 1.8% rise in full-year sales to an estimated 408,400 units. This includes data from members of the main local industry associations and also separate data from Hyundai, KIA and estimates for some of the smaller imported brands.

Last year’s market outcome will be seen as disappointing by the local auto industry in view of the 14% sales decline in 2018, which followed the introduction of broad-based tax increases in the country. Economic growth in the country is estimated to have slowed to around 5.8% in 2019 from 6.2% in the previous year, with growth picking up in the second half following a series of interest rate cuts by the central bank.

Vietnam’s vehicle market recovery came to a halt in the fourth quarter, with sales declining by 3.9% year-on-year to 86,868 units, resulting in a 10.6% rise in full-year sales to 306,073 units. The market is still adjusting to changes in government regulations introduced at the beginning of last year which had a significant effect on vehicle imports. Economic growth is estimated to have averaged 7.0% last year, driven by strong manufacturing and investment growth.

Indonesia

Indonesia’s new vehicle market declined by 6.3% to 276,172 units in the fourth quarter of 2019 from 294,852 units in the same period of the previous year, according to wholesale data compiled by industry association Gaikindo.

This was just a slight improvement on the 12% average decline in the previous three quarters, resulting in a 10.5% decline in full-year sales to 1,030,126 units from 1,151,291units in 2018 – making it the worst performing automotive market in the ASEAN region last year. Sales of light passenger vehicles declined by just over 10% to 785,539 units, while commercial vehicle sales dropped by almost 12% to 244,587 units.

Toyota reported a 5.8% sales decline to 331,797 units last year; while Daihatsu’s sales dropped by 12.6% to 177,284 units; Honda’s 137,339 units (-15.3%); Mitsubishi Motors 119,011 units (-16.7%); and Suzuki 100,383 units (-14.9%).

Economic growth in the country remained sluggish throughout 2019, with GDP estimated to have expanded by just over 5% amid declining exports and sluggish household consumption. Bank Indonesia cut its overnight lending rate from 6% to 5% last year, reversing the previous year’s tightening policy to help support domestic consumption.

Bank Indonesia is expected to continue to cut interest rates in 2020, by as much as 50 basis points according to Fitch Solutions, which would help stimulate domestic consumption, including vehicle demand.

Thailand

Thailand’s new vehicle market continued to deteriorate in the fourth quarter of 2019, with sales falling by almost 17% to 245,705 units from 295,155 units in the same period of last year according to wholesale data compiled by The Federation Of Thai Industries (FTI).

After expanding 7.1% in the first half of the year, the Thai vehicle market declined sharply in the second half – resulting in 3.3% drop in full-year sales to 1,007,552 units from 1,041,739 units in 2018. GDP growth slowed to an estimated 2.5% last year from 4.1% in 2018, reflecting declining exports and sluggish household consumption.

The vehicle market last year was also held back by stricter car-loan criteria by banks, which resulted in a significant rise in loan rejections – especially among small cars buyers and small business owners. Federation spokesperson Surapong Paisitpatanapong last month said financial institutions remain concerned about the high level of household debt in the country.

Passenger car sales declined slightly last year, by 0.3% to 398,386 units from 399,657 units in 2018, while SUV sales fell by almost 14% to 70,612 units. Sales of pickup-based vehicles were up by 2.9% to 481,498 units from 467,737 units in 2018, while sales of other commercial vehicles plunged by over 38% to 57,056 units.

The Federation expects the local vehicle market to weaken slightly in 2020, with total industry volumes forecast at around one million units, while major manufacturers are far more pessimistic. Toyota expects its own sales to decline by 6.7% to 310,000 units this year from 332,380 units in 2019 and is forecasting the total market to decline at a similar rate to around 940,000 units.

Malaysia

Malaysia’s new vehicle market jumped by over 12% to 161,296 units in the fourth quarter of 2019 from weak year-earlier sales of 143,859 units, according to registration data released by the Malaysian Automotive Association (MAA).

This follows an 11% decline in the third quarter, resulting in just a 1% rise in full-year sales to 604,287 units from 598,714 units in 2018. Passenger vehicle sales rose by 3.2% to 531,759 units last year, driven by strong demand for SUVs following the launch of new models by Proton and Perodua, while commercial vehicles sales declined by over 17% to 72,528 units – mainly reflecting weak international trade and declining investment.

Economic growth remained sluggish last year, with growth estimated at around 4.7%, similar to the previous year, reflecting weak manufacturing and export activity while domestic consumption looks to have strengthened in the second half of the year. The central bank cut its overnight interest rate by 25 basis points to 2.75% in January, the lowest levels since 2011, to help lift domestic activity as global economic uncertainty continues. The MAA forecasts a further moderate rise in total vehicle sales this year to 607,000 units.

A new National Automotive Policy (NAP) is expected to be announced in the current quarter, which will include provisions to change the calculation method of the Open Market Value (OMV) of vehicles – upon which local taxes are calculated, and further changes to import duties and excise tax rates. The changes are expected to be applied in 2021 and are widely expected to have a negative effect on the vehicle market, particularly on non-national car models including imported vehicles and CKD models.

Proton said its sales, including exports, rose by almost 56% to 100,821 units last year from 64,744 units in the previous year, helped by the launch of the Geely-based X70 SUV at the end of 2018 and the new Saga small car. The company expected its global sales this year to rise to 132,000 units, including 4,000-6,000 exports compared with just 1,070 units in 2019. It also aims to increase the number of export markets to ten this year from six.

Perodua reported a 5.8% sales rise to 240,341 units in 2019 and expects volumes to be flat in 2020; while Honda sales amounted to 85,418 units last year; Toyota 69,091 units; and Nissan 21,239 units.