Vehicle sales in the ASEAN’s six main markets declined by 18.3% to 1,328,430 units in the first nine months of 2009, with all markets reporting cumulative declines of varying degrees.
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Sales in the third-quarter declined by 12% to 483,630 units, a significant improvement on the 22% decline in the first half of the year.
Some of the smaller markets reported improving sales in the third quarter, including the Philippines and Vietnam, with volumes rising by 3% and 51% respectively year-on-year. The latter was boosted by a controversial tax reduction on passenger vehicles during the quarter, while the Philippine economy continued to be supported by high levels of remittances from overseas workers, which has boosted the small business sector.
Malaysia has supported its domestic market with scrappage incentives since the fourth quarter of last year, which has helped the market outperform its main peers this year – namely Thailand and Indonesia. Here, the rate of sales decline in the third quarter fell to 3.6%, from close to 10% in the first half of the year.
Interest rates remain low across the region and additional measures by governments to stimulate their domestic economies remain in place, including additional infrastructure expenditure and various tax incentives.
All countries in the region are counting on a recovery in exports to help drive growth once stimulus measures are exhausted. With capacity utilisation low at present, capital investment will take longer to recover.
The fourth quarter is expected to see a moderate recovery in vehicle demand, mainly as year on year comparisons improve but also as the third quarter improvement continues to gather. Vehicle sales in the six countries are likely to reach 1.85m units this year, followed by slow growth in 2010.
Malaysia
The Malaysian vehicle market was the largest in the ASEAN year to date, even though sales declined by 7.5% to 379,619 units in the January September period. Compared with the sharp declines seen in other countries in the region, Malaysia has been remarkably resilient – having benefited from low interest rates, currently at 2%, and scrappage incentives on national cars partly funded by the government.
The domestic economy overall has been boosted by a sharp increase in government expenditure and historically-low lending rates, which have helped offset the effects of the sharp decline in export activity. Still, GDP declined sharply in the first half of the year, by 3.9% in the second quarter after a 6.2% drop in the first quarter.
The vehicle market improved in the third quarter, with sales falling by just 3.6% year on year to 146,527 units, as consumer sentiment was lifted by early signs of economic recovery. The slower third quarter decline came despite a 9.2% year on year drop in sales in September to 46,069 units, due mainly to fewer working days as a result of the annual Hari Raya holidays. Full-year sales are expected to exceed 500,000 units.
The economy in the second half has been improving steadily, with industrial activity picking up in the third quarter and sentiment continuing to rise. Lending has loosened in recent months, but banks still are cautious. GDP is expected to shrink by 3.3% this year, followed by growth of 3.5-4.0% in 2010. Inflation is negligible at present, so interest rates will likely remain unchanged until a more robust recovery takes place.
Thailand
The Thai vehicle market continued to decline in the third quarter, with sales falling by 8.6% to 127,735 units compared with 139,783 units in the same period of last year. Compared with the 22.1% fall in year to date sales to 359,163 units, the market decline is clearly slowing – but this reflects more than anything the increasingly favourable year earlier comparisons rather than any significant pickup in demand.
The Thai economy shrank by 4.9% in the second quarter after a 7.1% decline in the first. The broadly held expectation for the full year is for a GDP contraction of 3.5%, which suggests the recession bottomed out in the third quarter. The political environment has stabilised in recent months, but consumer confidence remains fragile and underlying political tensions are unresolved.
Interest rates are close to rock-bottom at 1.35%, but this has so far failed to stimulate growth in vehicle demand, which is on course for a fourth consecutive negative year. Overcapacity in the economy inevitably adversely affects demand for commercial vehicles, including pickup trucks, which account for around 55-60% of total vehicle sales.
The vehicle market is likely to amount to 510-520,000 units this year, with volumes improving slowly next year. The prevailing view is for GDP to grow by an anaemic 2.5-3.0% in 2010, with stronger growth projected for 2011 as the global economy picks up momentum. Economic growth depends on a moderate recovery in exports and pent up domestic demand offsetting tighter monetary and fiscal policies next year.
Indonesia
The Indonesian vehicle market declined by close to 28% in the first nine months of 2009 to 337,543 units. Third quarter sales declined at a similar rate, to 126,964 units, reflecting still tough year on year comparisons. Indonesia was one of the last economies in the region to be affected by the financial crisis last year.
GDP growth is estimated at around 4.2% for the third quarter, after growing by 4.0% in the second quarter and 4.4% in the first. The economy has outperformed in the ASEAN region this year, helped by its large domestic market and its largely commodity-based export sector.
Bank Indonesia continues to hold interest rates at pro-growth levels of 6.5% and commercial banks have agreed to pass on more of the recent rate cuts to their customers. Government expenditure has increased this year and the stable political environment has helped domestic sentiment.
A moderate improvement in the vehicle market is expected in the fourth quarter, as year on year comparisons become easier. Average monthly sales increased in the third quarter and full-year sales are expected to reach 460-470,000 units.
Stronger economic growth, of 5.5%, is forecast by the government in its recently published 2010 budget. The Asia Development Bank also expects similar growth next year, helped by an improving export sector. Vehicle sales are expected to grow moderately in 2010, to over 500,000 units.
Tony Pugliese
Vehicle sales in the ASEAN by market, 2005-09
| 2005 | 2006 | 2007 | 2008 | 1-9 2008 | 1-9 2009 |
533,910 | 317,312 | 434,499 | 607,799 | 467,222 | 337,543 | |
Malaysia | 552,316 | 490,768 | 487,176 | 548,115 | 429,913 | 397,619 |
Philippines | 97,063 | 99,541 | 117,903 | 124,449 | 94,133 | 93,385 |
Singapore | 124,922 | 132,981 | 119,215 | 108,478 | 83,408 | 60,346 |
Thailand | 703,432 | 682,500 | 631,250 | 615,270 | 461,258 | 359,163 |
Vietnam | 39,876 | 40,823 | 80,392 | 110,186 | 90,057 | 80,374 |
Total | 2,051,519 | 1,763,925 | 1,870,435 | 2,114,297 | 1,625,991 | 1,328,430 |
Sources: Industry sources.
