South-East Asia's vehicle markets largely shrugged off the recent financial turmoil with a rise of almost 11% in September to 167,644 units. Sales were buoyant in all but one of the region's six largest markets, with new vehicle registrations in Singapore declining 23% to 9,966 units during the month after several years of unprecedented volumes.

Thailand's vehicle market - ASEAN's largest - showed a marked improvement despite the domestic political uncertainty, as vehicle manufacturers offered discounts and other special offers with full-year sales targets in mind. Malaysia, too, saw a significant sales improvement in September. The fastest-growing market in September was Vietnam, however, where volume doubled to 7,683 units.

In the first nine months of the year, ASEAN's vehicle sales approached 1.36m units - up by 3.6% year-on-year. Growth has been driven primarily by a strong recovery in the Indonesia market - as the domestic economy responded to substantial cuts in interest rates. Similarly, the Philippine vehicle market has been strong throughout the year, with sales rising to levels not seen since before the Asian financial crisis 10 years ago. Overall, ASEAN sales are on target to exceed 1.8m units in 2007 - up from 1.73m in 2006.

The Indonesian market continued its recovery from the sharp drop in 2006, with volume rising by 20.1% to 41,035 units in September, compared with a year earlier. The economy has continued to benefit from rising domestic consumption as interest rates have been reduced over the last year. This has encouraged higher investments, particularly in resources, property and construction sectors.

Interest rates were left unchanged at 8% by the Bank of Indonesia last month, with inflation largely in check and with the current value of the rupiah at acceptable levels. The government and the IMF expect the country's GDP to grow by over 6% in 2007 and by up to 6.2% in 2008, with rising investments and higher exports helping to maintain the growth momentum.

Vehicle sales rose by 36.1% in the first nine months of 2007 to 451,326 units, compared with 233,753 units a year earlier. Manufacturers have been revising their full-year projections upwards in the wake of the strong market performance of the last few months. The full-year outlook now is for sales to reach 420,000 units - around 32% higher than last year's 318,000.

Toyota's sales amounted to 109,242 units in the first nine months, with sales of passenger cars - particularly the Vios and Camry, spearheading the growth. The Avanza was the best-selling model with 47,902 sales in the nine-month period, followed by the Innova with 28,929 units and the Vios/Limo with 16,174.

After a negative first half, the Malaysian vehicle market's third-quarter recovery continued in September, with sales rising by 4.9% to 44,984 units year-on-year. The market was helped by new models and improving consumer confidence, reflecting ongoing private income growth, asset appreciation and further loosening of the lending environment. Strong domestic economic growth helped offset weak export sales, to key markets such as the USA.

GDP growth in the first half was below the average of the last few years, at 5.6%, but a stronger second half is expected to being full-year growth to around 5.8%. Vehicle sales in the first nine months of the year were down by 6.3% to 451,234 units - with the third quarter recovery not enough to offset the sharp drop in volumes during the first half.

Proton's new Persona model has helped drive demand higher, with the country's first national automaker reporting high order intake for the model. Perodua also reported strengthening demand for models such as the Myvi small car.

The Philippine vehicle market jumped by 23% year-on-year in September to 10,485 units, according to data released by automakers association CAMPI, as strong economic growth continued to fuel automotive demand. The service sector continued to spearhead the country's economy, which expanded by 7.5% in the second quarter of the year.

In the first nine months of 2007, sales expanded by 16.6% to 84,050 vehicles compared with 72,085 units a year earlier. This puts the market on track to move into six-digit figures before year-end - a level not seen since before the Asian economic crisis almost a decade ago.

Economists are cautious about the economic outlook, with inflation risk resulting from rising oil prices and strong consumer demand. A further slowdown in the US economy could also affect exports further. But most in the automotive industry are expecting a strong end to the year, with sales likely to exceed 115,000 units for the full year with addition momentum from dealer promotions.

Toyota continued to dominate the market by selling 31,224 in the first nine months, followed by Honda with 12,993 and Mitsubishi's 10,775 units.

The tentative recovery in Thailand's vehicle market gained a bit of momentum in September, with sales rising by 8.3% year-on-year to 53,491 units - according to data released by local vehicle distributor Tri Petch Isuzu Sales. The comparison was against a weak September 2006, however, and came amidst heavy discounting and promotional activity as vehicle manufacturers attempt to meet their full-year targets.

In the first nine months of 2007, sales were down by 7.6% to 451,326 units - compared with 488,419 in the same period of the previous year. A year after the military seized power in a peaceful coup, consumers and business leaders remained cautious ahead of the expected end-of-year elections. Economic policies and leadership remain the key concerns, although uncertainty has been further heightened by the unstable global financial market in July and August.

Consumers in September were tempted back into the market by low interest rates, with the Bank of Thailand rate at 3.25%, and promotions such as free comprehensive insurance and discounts on down payments from Toyota; interest-free hire-purchase on key models from Honda; and interest-free finance on all models and additional discounts from Chevrolet.

Toyota reported sales of 199,662 units in the nine-month period, for a market share of 44.2%, with passenger cars such as the revised Vios helping volume to continue to recover in September. Isuzu followed in second place with 103,174 sales and a 22.9% share, with Honda in third place with 48,236 sales and a 10.7% share of the market.

Tony Pugliese

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