Our regular report on macro developments in the vehicle markets of southeast Asia shows that growth slowed in Q3. However, cumulative regional sales are still up almost 6% on last year.

New vehicle sales in southeast Asia's six largest markets increased by just 2% to 816,877 units in the third quarter of 2017, from 801,096 units in the same period of last year, according to data collected exclusively for just-auto by AsiaMotorBusiness.com.

This represents a marked slowdown from the more than 10% annualised growth reported in the first quarter and 4.8% growth in the second quarter, and mainly reflects declining sales in Indonesia, Malaysia and Vietnam.

Regional sales in the first nine months of the year were still 5.7% higher at 2,422,242 units, however, compared with 2,292,642 units in the same period of last year.

Third-quarter economic growth across the region is estimated to have been at least as strong as in previous quarters, with investment, private consumption and exports continuing to underpin growth.

The region's largest vehicle market, Indonesia, saw its first quarterly decline in a long while in the third quarter, with economic growth struggling to rise significantly above 5%. In the last two months Bank Indonesia has cut interest rates on two occasions to help stimulate consumer spending.

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Sales in Thailand picked up momentum in the third quarter, with volumes rising by over 12% year-on-year to 210,894 units after a slowdown in the second quarter. With a strong fourth quarter in prospect, the Thai market looks to be finally recovering from a four-year slump.

Malaysia's vehicle market continued to slip in the third quarter, despite a strong pick-up in economic activity this year driven by a rebound in exports and higher commodity prices. The market is struggling to make significant progress even after last year's 13% decline, with cumulative nine-month sales less than 2% higher at 425,711 units.

The region's smaller vehicle markets put in a mixed performance in the third quarter, with Philippine sales continuing to grow strongly even after four years of unprecedented growth. Third-quarter sales among the members of the country's main trade associations increased by almost 14% to 106,705 units, bringing the cumulative nine-month total to a record 302,869 units.

Sales in Vietnam declined by more than 14% year-on-year to 59,356 units in the third quarter, after a more moderate decline in the second quarter, as the market continues to digest the explosive growth seen in the previous four years. Cumulative nine-month sales were more than 4% lower at 184,843 units.

Sales in Singapore increased by over 8% to 29,197 units in the third quarter and by 4.3% to 84,189 units in the first nine months of the year, reflecting low registration taxes at present.

Indonesia

Indonesia's new vehicle market shrank by 3.9% to 269,475 units in the third quarter of 2017 from 280,309 units a year earlier, according to data released by industry association Gaikindo.

Sales in the first nine months of the year were still 2.7% higher at 803,760 units from 782,840 units in the same period of last year, underpinned by low interest rates and a large number of important new model launches over the last two year.

The third-quarter market decline reflects a broader slowdown in consumer spending growth in the country. Economic growth has remained moderate this year at just over 5%, despite a recovery in exports, higher commodity prices and rising investment.

Bank of Indonesia (BI) cut its benchmark interest by 25 basis points twice in the last two months to 4.25% to help stimulate domestic consumption. The rate here is still high compared with in neighbouring economies such as Thailand, Malaysia and the Philippines, leaving room for further cuts if required in the future.

The key compact MPV segment continues to get more competitive, with the recent launch of the locally-produced Wuling Confero and more importantly the new Mitsubishi Xpander taking on established models such as the Toyota Avanza, Daihatsu Xenia and Honda's BR-V and Mobilio. This could provide some support to the market in the fourth quarter.

Thailand

Thailand's new vehicle market strengthened significantly in the third quarter, with sales rising by 12.2% to 210,894 units from 187,895 units a year earlier, according to wholesale data collected by the Federation of Thai Industries (FTI).

The market looks to be finally recovering from four straight years of decline, which culminated in a 4% drop to 768,788 units last year compared with peak volumes of 1.43 million units in 2012.

Sales in the first nine months of the year were 11.6% higher at 620,870 units compared with 556,525 units in the period of last year, driven by low interest rates, the launch of new passenger vehicle models and the end of the lock-in period for tax rebates to vehicle buyers under the government's first-time buyer scheme over five years ago.

Earlier in the year the FTI forecast full-year sales to rise by around 4% to 800,000 units. But given the market's strong performance so far this year and the prospect of a strong fourth quarter compared with weak year-earlier data, the Thai market is more likely to finish the year close to 880,000 units.

Malaysia

Malaysia's new vehicle market continued to drift lower in the third quarter, with sales slipping by 1.1% to 141,250 units from 142,794 units a year earlier, according to data released by the Malaysian Automotive Association (MAA).

The market is struggling to recover from last year's 13% decline despite improving economic conditions in the county. Sales in the first nine months of the year were just 1.8% higher at 425,711 units from 418,277 units in the same month of last year.

The country's GDP expanded by an estimated 5.7% in the first half of the year, up from 4.3% in 2016, helped by stronger private consumption growth and a recovery in export activity.

The MAA expects only a slight improvement in sales in 2017, to around 590,000 units, with demand underpinned by new models and aggressive marketing.