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ANALYSIS: ASEAN sales up 27% in Q3

By Staff reporter | 25 October 2012

New vehicle sales in the ASEAN region’s six largest markets increased by over 27% to 918,216 units in the third quarter of 2012, from 721,543 units in the same period of last year, writes Tony Pugliese.

The region’s two largest markets, Thailand and Indonesia, continued to account for most of the growth, helped by government stimulus and low interest rates. Thailand’s economy continued to bounce back from the devastation caused by last year’s floods, with the help of significant government stimulus. The vehicle market also continues to enjoy pent-up demand carried over from last year.

Both Thailand and Indonesia are expected to set new sales records in excess of 1m new vehicles for the first time this year, driving regional sales to above 3.2m units – from just under 2.6m units last year.

Sales in Malaysia increased by 2.7% to 157,223 units in the third quarter, while in the Philippines sales were up by close to 11%. Sales in Vietnam and Singapore continued to be negative, albeit for significantly different reasons. 

Economic growth in the region moderated in the third quarter, with falling overseas demand affecting export volumes and commodity prices. Interest rates were mostly kept on hold across the region, albeit with central banks alert to the potential need to further underpin domestic consumption and confidence.

Thailand was the first to break rank in October with a 25 basis point cut in central bank interest rates to 2.75%, amid growing signs of weakening domestic confidence.

Thailand

Thailand’s new vehicle market continued to boom in the third quarter of 2012, with sales rising by almost 65% to 393,835 units compared with 238,958 in the same period of last year.

With production now fully restored, the country’s automotive industry is catching up on lost production in the wake of last year’s floods. Incentives for first-time buyers have also helped increase vehicle sales, particularly of sub-compact passenger cars. 

Cumulative sales in the first nine months of 2012 were up by close to 49% to 998,717 units. Full-year sales are likely to spike at close to 1.3 million units, with the current strong growth momentum expected to continue in the fourth quarter. This year the market is expected to set a significant record that will likely take some years to beat.

Economic growth accelerated to 4.2% year-on-year in the second quarter, despite weakening exports. Stimulus measures such as increases in minimum wage levels and disaster relief expenditure have helped the domestic economy to recover rapidly. 

Similar economic growth is expected in the third quarter, despite the slowdown in export demand. The Bank of Thailand responded to ebbing consumer and business confidence by cutting interest rates by 25 basis points to 2.75% in October. 

Full-year GDP growth is widely expected to exceed 5%, with a sharp spike expected in the fourth quarter – with growth flattered by weak year-earlier data.

Indonesia

Growth in new vehicle sales in Indonesia slowed to 16.4% to 281,993 units in the third quarter, compared with annualised growth of 49% in the second quarter – according to data released by industry association Gaikindo.

The slower growth came despite the improved supply of inventory originating from Thailand and follows the introduction of tougher lending rules by the Bank of Indonesia in June to help prevent the economy from overheating.

Year-on-year comparisons are also getting tougher, after very strong sales growth in the second half of 2011. 

Domestic economic growth remains robust, helped by record low interest rates and strong public and private sector investment. Full-year GDP growth is forecast at between 6.2-6.5%, after growing by 6.4% in the second quarter. The main weakness in the economy is the export sector, with the fiscal crisis in Europe continuing to hold back overseas demand. 

Cumulative vehicle sales for the January-September were up by close to 24% at 816,869 units, from 659,857 units a year earlier. The market is expected to exceed 1m units for the first time this year, helped by the broadening range of sub-compact cars and strong demand for the best-selling Avanza/Xenia compact MPV range, which was updated at the end of last year.

Malaysia

New vehicle sales in Malaysia rose by just 2.7% year-on-year to 157,223 units in the third quarter, following a strong burst of growth in the second quarter - of 14.5% - after the market adjusted to new registration procedures and minimum loan down-payment requirements introduced at the beginning of the year.

Improvements in CKD supplies from Thailand, after disruption from floods in the fourth quarter of last year, also had a positive impact in the second quarter. But this has not carried through significantly into the third quarter. 

Cumulative sales for the first nine months of the year were just 1.8% higher at 458,447 units, from 450,244 a year earlier, reflecting the negative first quarter. The market overall looks saturated at these levels in the short-term, and in need of stronger economic growth or some additional government stimulus to push volumes significantly higher from current levels.

GDP growth is forecast at between 4.5-5.0% this year, driven mainly by strong domestic consumption. Exports weakened significantly in the third quarter, as the debt crisis in Europe continued to hurt demand. Commodity prices have also weakened significantly in the last few months.

The Malaysian Automotive Association (MAA) suggests that, given the country’s high automotive taxes, many buyers are waiting to see if any new regulations under the country’s new Automotive Policy will bring prices down.

Vehicle sales in the ASEAN region by market, 2009-12

Country 2009 2010 2011 1/9/2011 1/9/2012 % chge
Thailand 548871 800367 794091 670970 998717 48.8
Indonesia 483548 764710 893164 659857 816869 23.8
Malaysia 536905 605156 600123 450244 458447 1.8
Philippines 132444 170216 162413 120189 128738 7.1
Vietnam 119868 112224 110938 81766 57315 -29.9
Singapore 76397 47839 35904 27063 25641 -5.3
Total 1898033 2500512 2596633 2010089 2485727 23.7

Sources: www.AsiaMotorBusiness.com from industry sources.