New vehicle sales in the ASEAN region’s six main markets continued to decline in the second quarter, by 6.7% to 811,461 units, according to data compiled by Tony Pugliese from various industry sources.
First-half regional sales in ASEAN fell by close to 11% to 1,615,983 units, from 1,811,832 units previously, reflecting a particularly weak first quarter when sales fell by almost 15%.
Go deeper with GlobalData
The sales decline so far this year is entirely due to the sharp recession in the Thai vehicle market, where first-half sales fell by over 40% to 441,000 units. This market was always going to suffer from a hangover from the previous government’s first-time buyer incentive programme, which expired at the end of 2012.
The political crisis, which culminated in a military coup in May, has made matters a lot worse for the automotive industry. Consumer and business confidence continued to plummet in the second quarter and private investment also has declined. Year-on-year, the economy was flat at best in the first half of the year.
The vehicle market’s rate of decline in the second half of the year is expected to slow, mainly as a result of much easier year-earlier comparisons. Full-year sales are expected to decline by close to 25% to around 1m units.
All other markets in the region were positive in the second quarter and in the first two quarters combined. Indonesia has replaced Thailand as South-east Asia’s largest market, even though the rate of growth has slowed sharply following last year’s interest rate hikes. Low-cost green cars have kept the market afloat this year.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataMalaysia enjoyed a rebound in the second quarter from weak levels last year, which lifted first-half sales growth to close to 7%, while the Singaporean market looks to be recovering from a multi-year slump as the government inevitably continues to promote public transport.
Strongest regional growth was reported in the Philippines, a market that has enjoyed historically low interest rates of 3.5% for the last two years. With consumer confidence at a high, the vehicle market is expected to hit a new record this year of close to 230,000 units.
Vietnam’s economy is also enjoying near historically-low interest rates, which is helping the vehicle market to rebound from the sharp decline in 2012. High taxation remains a key impediment for this market, however.
Indonesia
Growth in new vehicle sales in Indonesia slowed to just 2.6% year-on-year to 313,957 units in the second quarter of 2014, compared with annual growth of close to 11% in the first quarter, according to data collected by industry association Gaikindo.
First-half sales increased by 6.7% to a record 642,311 units, reflecting stronger first-quarter growth. Last year’s interest rate hikes and the introduction of other lending restrictions such as higher loan down-payments evidently have had an impact on the market.
The country’s economy is estimated to have expanded by 5.3% in the second quarter, after growth of 5.2% in the first quarter, with domestic consumption supported by election spending and with exports beginning to improve.
The introduction of Low-Cost Green Cars (LCGCs) by the country’s main automakers in the second half of last year has helped underpin an otherwise weakening vehicle market. Sales of mainstream light passenger vehicles weakened significantly in the first half of the year, with tougher lending and some degree of market saturation affecting demand. First-half sales of goods vehicles were also significantly weaker.
Bank Indonesia expects the economy to continue to grow at the current pace in the second half of the year, with activity affected by a degree of policy uncertainty following the election of a new government. One key decision to be made is whether to reduce fuel subsidies further.
Overnight interest rates have been on hold at 7.5% since the end of last year, but could be reduced if domestic consumption and inflation falls significantly from here. Full-year vehicle sales will likely remain unchanged from last year’s levels, given the current moderate rates of economic growth.
Thailand
New vehicle sales in Thailand fell by 33.6% year-on-year to 216,740 units in the second quarter, after an annualised decline of almost 46% in the first quarter, according to the Federation of Thai Industries.
The marginal slowdown in the rate of decline in the second quarter reflects mainly improving year-earlier comparisons, rather than material improvement in market conditions.
The vehicle market continued to suffer from the after-effects of the government’s first-time buyer programme, which was withdrawn at the end of 2012, while the country’s economy has been severely affected by political unrest.
The Thai economy shrank by 0.6% year-on-year in the first quarter of 2014 and flat growth at best is estimated for the second quarter. Private investment has continued to weaken as political turmoil, which culminated in a military coup in May, continued to depress business sentiment. Confidence among the country’s increasingly indebted consumers also reached a low point in the second quarter.
Exports fell by 1.2% in the first five months of the year at close to USD 93 billion, but the outlook for this sector at least is improving after growth of 7.2% in June.
Full-year GDP growth is broadly expected to come in at around 2%, with the military junta taking on important government activities and decisions, including the long-awaited disbursement of grants to rice farmers. This is expected to help increase domestic consumption in the second half of the year. Benchmark interest rates were cut to 2% in April and a further cut is likely if domestic consumption remains weak.
The short-term outlook for the vehicle market remains depressed, however, with domestic sales likely to fall below the 1 million-unit mark this year.
Malaysia
Malaysia’s new vehicle market bounced strongly in the second quarter, with sales growing by close to 12% year-on-year to 173,232 units – albeit compared with weak year-earlier data, according to data released by the Malaysian Automotive Association (MAA).
First-half sales increased by 6.3% to a record 333,142 units, with the country’s economy estimated to have expanded by 5.8% in the first half of the year after first-quarter growth of 6.3%. The economy has been lifted by a recovery in exports, while domestic consumption remained buoyant throughout the second quarter.
Consumer confidence remains strong and employment levels high. Malaysia’s national bank raised its benchmark interest rate to 3.25% in July in response to rising inflation and to help curb rising household debt. A further hike is widely expected before year-end.
Full-year GDP growth is widely expected to be around 5.5%, with exports continuing to contribute positively. Tighter lending is expected to have an effect on passenger vehicle sales in the second half of the year, but the overall vehicle market is still likely to hit a new record this year – of around 660,000 units.
Vehicle sales in the ASEAN region by market, 2011-14
| 2011 | 2012 | 2013 | 1-6 2013 | 1-6 2014 | % chge | |
| Indonesia | 893,164 | 1,116,230 | 1,229,901 | 601,935 | 642,311 | 6.7 |
| Thailand | 794,091 | 1,436,335 | 1,325,079 | 739,046 | 440,911 | -40.3 |
| Malaysia | 600,123 | 627,753 | 655,793 | 313,488 | 333,142 | 6.3 |
| Philippines | 162,413 | 182,779 | 211,000 | 98,218 | 126,859 | 29.2 |
| Vietnam | 110,938 | 80,652 | 96,692 | 43,971 | 54,986 | 25.1 |
| Singapore | 35,904 | 33,914 | 27,374 | 15,174 | 17,774 | 17.1 |
| Total | 2,596,633 | 3,477,663 | 3,545,839 | 1,811,832 | 1,615,983 | -10.8 |
Sources: www.AsiaMotorBusiness.com from industry sources.
