- Q4 decline slows as some markets rebound
Sales of new vehicles in southeast Asia’s six largest markets combined declined by just over 10% to 852,286 units in the fourth quarter of 2020 from 937,114 units in the same period of the previous year, according to data exclusively for just-auto from local industry sources including vehicle manufacturers, trade associations and government departments.
The annual picture shows much sharper declines earlier in the year, including a 24% drop in the third quarter and a 66% plunge in the second quarter, when economic activity across the region was severely disrupted by business and social lockdowns put in place to help slow the spread of the COVID-19 pandemic. Some markets in the region, such as Thailand, began to stabilise in the fourth quarter while sales in Malaysia and Vietnam began to rebound.
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By GlobalDataWhile significant economic restrictions remain in place across the region, including a ban on foreign tourist arrivals which continues to have a devastating effect on the travel, tourism and hospitality sectors, domestic economic activity has begun to recover – helped by low interest rates and fiscal stimulus measures introduced by national governments. Exports also enjoyed a moderate rebound towards the end of last year, helped by strong demand from China, but renewed lockdowns in the region and in numerous markets around the world in response to a resurgent COVID-19 have dampened sentiment in recent weeks.
ASEAN’s largest vehicle market in 2020 was Thailand, despite a more than 21% sales decline to 792,146 units, while Indonesia slipped into second place after sales fell by over 48% to 532,027 units – making it the region’s worst-performing market last year. Malaysia was a close third, with sales down by just over 12% at 529,434 units.
New vehicle sales in the Philippines declined by over 31% to 285,512 units in 2020, based on data released by the main local automotive associations, making it one of the worst-affected markets in the region as the country battled with continued surges in virus infection rates.
Vietnam was the best-performing vehicle market in the region last year, with sales falling by just over 7% to 283,983 units. This is the only country in the region to have avoided falling into recession last year, helped by pre-emptive action early on to control the spread of the COVID19 pandemic and its growing status as an alternative production location to China.
Thailand
Thailand’s new vehicle market expanded by 1.3% to 248,927 units in the fourth quarter of 2020 from weak sales of 245,705 units a year earlier, based on data compiled by the Federation of Thai Industries. This follows a 29% decline in the first nine months of the year, as the country’s economy came under pressure from the global COVID-19 pandemic.
Day-to-day economic activity in the country gradually began to normalise in the second half of the year after social and business restrictions put in place to control the spread of the pandemic were eased towards the end of the second quarter. GDP shrank by 6.4% year-on-year in the third quarter after plunging by 12.1% in the second quarter, with government stimulus measures helping to reduce the rate of economic decline.
Fourth quarter economic output is expected to have improved significantly compared with the previous quarters, with record-low interest rates of 0.5% helping to stimulate consumer spending while exports also began to improve – helped by rising demand in China. Private investment picked up in the final months of the year, indicating improving sentiment in the country – albeit from low levels.
Over the full year, total vehicle sales in Thailand declined by just over 21% to 792,146 units from 1,007,552 units in 2019, with the local media reporting private passenger vehicle sales fell by 31% to 274,789 units; patrol vehicles 68,705 units (-2.2%); pickup trucks 364,887 units (-15.5%); pickup-based passenger vehicles 44,576 units (-26.3%); and other vehicles 39,189 units (-16.2%).
Vehicle production in the country fell by over 29% to 1.42 million units last year, while exports dropped by over 30% to 735,842 units.
The FTI last week said it expects domestic vehicle sales to decline further this year, by over 5% to 750,000 units, with economic growth remaining under pressure as renewed social and business lockdowns around the world continue to hold back export demand. Rising COVID-19 cases in Thailand have also affected domestic sentiment. By contrast, the country’s largest carmaker Toyota Motor said it expects total vehicle sales to rise by between 7% and 14% to 850,000–900,000 units.
Indonesia
New vehicle sales in Indonesia continued to fall sharply in the fourth quarter of 2020, by almost 42% to 159,981 units from 276,172 units in the same period of last year, according to member wholesale data compiled by industry association Gaikindo. This followed an almost 51% plunge in the first nine months of year, reflecting declining economic output after social and business restrictions were implemented throughout most of last year to help slow the spread of the COVID-19 pandemic.
Indonesia is one of the countries in Asia worst affected by the global pandemic, with domestic consumption and exports declining sharply last year. GDP declined by 3.5% in the third quarter of 2020 after shrinking by 5.3% in the second quarter and continued social and business restrictions due to a resurgence of the pandemic point to a further decline in the fourth quarter.
Total vehicle sales plunged by over 48% to 532,027 units in 2020 from 1,030,126 units in 2019, making Indonesia the worst-performing automotive market in the ASEAN region. Sales of passenger vehicles were down by over 50% at 388,886 units, while sales of trucks and buses fell by over 41% at 143,141 units.
Toyota reported a more than 51% decline in wholesale volumes to 161,256 units in 2020; followed by Daihatsu with a 49% fall to 90,724 units; Honda 73,315 units (-47%); Suzuki 66,130 units (-34%); and Mitsubishi Motors 57,906 (-51%).
The central bank has cut its benchmark interest rate to a historic low of 3.75% to help stimulate economic activity, while the government has made significant efforts to attract inward investment – including large infrastructure, mining and industrial projects. The Asia Development Bank in its latest forecast said it expected the country’s GDP to have declined by 2.2% last year, but expects growth of 4.5% in 2021.
Because of the significant uncertainty due to a resurgence of the COVID-19 pandemic around the world, industry association Gaikindo has not yet provided a market forecast for 2021 – after sales last year fell significantly short of its revised 600,000-unit full-year forecast released in August.
Malaysia
Malaysia’s new vehicle market continued to expand in the fourth quarter of 2020, by almost 17% to 187,945 units from 161,296 units in the same period of the previous year, according to registration data released by the Malaysian Automotive Association (MAA).
This followed a 14% year-on-year rise in the third quarter and wiped out most of the 50% decline seen in the first half of the year, when economic activity was severely restricted by the government’s Movement Control Order (MCO) introduced in March to help slow the spread of the COVID19 pandemic. The economy is expected to have begun to recover in the fourth quarter, having shrunk by 2.7% year-on-year in the third quarter and by more than 17% in the second quarter of 2020.
Vehicle buyers continued to enjoy the sales tax holiday exemption introduced by the government last June to support for the country’s automotive industry. This was originally due to expire at the end of 2020, but has been extended until the end of June 2021. New models, particularly from Proton, have also helped attract buyers to the market, along with aggressive promotional campaigns by dealers and attractive finance packages following aggressive interest rate cuts by the central bank last year.
Over the full year total new vehicle sales were down by 12.4% at 529,434 units from 604,281 units in 2019, with passenger vehicles falling by 12.6% to 480,965 and commercial vehicles down by 10.4% at 48,469 units. Perodua’s sales fell by 8.4% to 220,154 units; followed by Proton with an 8.8% increase to 109,716 units; Honda 60,469 units (-29%); and Toyota 59,320 units (+13%).
The strong fourth quarter market rebound beat all expectations and the industry is increasingly upbeat on the outlook for sales in 2021. The local Kenanga Investment Bank said it expects the market to expand by over 10% to 585,000 units this year, with the extension to the sales tax exemption helping to deliver strong growth in the first half of the year.
