Though Thailand and Indonesia are looking forward to increases in market size this year, Malaysia may well see the opposite as Frost & Sullivan forecasts a Total Industry Volume (TIV) of 600,000 units – 2.9% lower than that for the expected TIV of 2012.
Kavan Mukhtyar, Partner & Head of the Automotive & Transportation Practice, Asia Pacific at Frost & Sullivan, said that the projected marginal decline in the TIV in 2013 is due to the overall uncertainty with regards to the general elections and the likely announcement of the revised National Automotive Policy (NAP).
“These two factors are likely to restrain fresh demand as well as the significant replacement market,” he explained.
He added that the trimming of subsidies to contain budgetary deficit will lead to a possible increase in fuel prices which will likely lead to an increase in vehicle ownership cost. Another factor which can negatively impact sales, especially the cheaper entry-level models, is the continued tightening of hire-purchase rules and stricter loan approvals.
Although there will be quite a number of new models launched this year, Mr. Mukhtyar said that the car companies are likely to adopt a cautious approach in launching new models until the revised NAP is announced.
While the passenger vehicle segment is likely to fall by 4.7% (compared to the 2012 expected TIV), sales of commercial vehicles could continue to rise in 2013, driven by strong performance in the construction, oil and gas industry.
“The commercial vehicle segment is expected to grow 9.9% year-on-year to 82,000 units in 2013,” Mr. Mukhtyar said.
(Chart by Frost & Sullivan)
Going into more detail, he said sales for the A-segment (sub-compact cars like the Perodua Viva) will continue to shrink, possibly by as much as 15% year-on-year to 50,000 units in 2013. This would be due to limited choices offered and stricter credit control.
“The A-segment will continue to shrink as new entry-level customers jump to B-segment offerings,” Mr. Mukhtyar said, adding that this trend is a worldwide phenomenon.
Nevertheless, he added, ‘volume segments such as B, C and MPV will see a drop in sales, despite greater hybrid vehicle sales and launch of new models’.
“With the duty exemption for hybrid vehicles until the end of 2013, new models in the pipeline and growing customer acceptance, hybrid vehicle sales are expected to nearly double compared to 2012,” he said. Frost & Sullivan predicts hybrid vehicles sales to reach 35,000 units in 2013 (around 18,000 were sold in 2012, it is expected when official data is released).
Nissan LEAF and Mitsubishi i-MiEV will go on sale in Malaysia later this year
Mr. Mukhtyar expects the government to further introduce incentives on income tax as an initiative to promote green technology as Malaysia positions itself to be an energy efficient vehicles (EEV) hub. “However, there are no special tax breaks for pure electric vehicles, therefore its prices would still remain fairly high,” he said, adding that the key selling points of the hybrids are the environment-friendly image, fuel economy and attractive price.
He said that the challenges to adoption of electric vehicles are primarily consumer concerns regarding maintenance, resale value, cost of ownership, safety and recharging infrastructure.
(Chart by Frost & Sullivan)
Looking back at the market in 2012, Mr. Mukhtyar said that Frost & Sullivan forecasts the TIV to be 618,000 units, a 3% increase over the 2011 TIV. This growth was attributed to pent-up demand, normalization in the automotive parts supply chain and launch of several new models.
“2012 saw the automotive industry bouncing back despite a weak start to the year due to tightening of lending guidelines, supply chain disruptions from the flood in Thailand and uncertainty revolving the budget and NAP in the later part of the year,” said Mr. Mukhtyar.
Of the two national carmakers, Perodua is expected to be the overall market leader and Frost & Sullivan’s calculations are that the company took a 34.1% share while Proton had 26.3%. The latter share is 3% lower than what Proton achieved in 2011, in spite of the new Preve being introduced.
Toyota and Honda are likely to have increased their 2012 market shares to 13.3% and 6.3%, respectively, due to normalization in the parts supply chain and new key model launches (especially in the hybrid vehicle segment).
The actual numbers for 2012 will be released by the Malaysian Automotive Association (MAA) later this month.
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