ASEAN Light Vehicle Sales Update
ASEAN Market Suffers Sharpest Decline so far this year in August, Leading to full-year 2019 Forecast of -3%
ASEAN Light Vehicle (LV) sales declined by a dramatic 10% year-on-year (YoY) in August, the sharpest drop so far this year. This pushed the year-to-date (YTD) performance from positive territory in July (+0.3% YoY) into negative territory in August (-1% YoY).
Vietnam was the only market to record growth in the month (+3% YoY), driven by a buoyant economy and higher demand for CBU imports, in particular the Ford Ranger Pickup Truck and Mitsubishi Xpander MPV. However, rising global uncertainty and the widening US-Vietnam trade deficit led us to cut the Vietnamese sales outlook to 370k units for 2019 and 389k units for 2020. These results would, nevertheless, represent growth of 15% and 5% YoY, respectively.
The remaining ASEAN5 markets all posted downturns in the month: Malaysia (-20% YoY), Indonesia (-11% YoY), Thailand (-7% YoY) and the Philippines (-2% YoY).
Malaysia’s substantial decline resulted from last year’s distorted demand as consumers rushed to buy vehicles during the three-month tax holiday in June-August 2018, when the government imposed a 0% tax rate for all goods sold in the country during the transition from the GST to the SST tax system – hence the steep drop in June-August 2019 (-26% YoY). If we break this down into individual months, however, we can see an improvement in the rate of decline from -34% YoY in June, to -25% YoY in July and -20% YoY in August. Although the August result was better than anticipated, we decided to keep our forecast for the Malaysian market unchanged at 596k units for 2019 and 600k units for 2020 as external factors will continue to exert pressure on the economy and income growth. Indeed, exports contracted in YoY terms for the eighth consecutive month in August.
The double-digit decline in Indonesian LV sales resulted from weak consumer sentiment. All major OEMs posted negative results, both in August and YTD. Only Nissan, Isuzu and Dongfeng saw any significant growth in percentage and volume terms, driven by new model introductions, namely the Livina and TeRRA for Nissan, the Glory 560 and Mini Truck for Dongfeng, and the TRAGA for Isuzu.
We forecast a decline of 14% to 904k units for 2019 and growth of about 5% to 948k units for 2020, meaning that Indonesian LV sales will fall below 1 mn units in both years. The positive factors supporting our growth projection for 2020 are a) lower interest rates – the central bank cut the base rate for the third month in a row to 5.25% in September, from 6% in June this year; and b) the reduction in the mandatory down payment for auto loans from 25% to 15% from 2 December 2019. (Around 75% of vehicle purchases in Indonesia are
funded by loans).
The 7% YoY decline (-5.7k units) in LV sales in Thailand in August was due to downturns of 6% YoY (-2.2k units) and 14% YoY (-2.9k units) in the Pickup Truck and eco-car segments, respectively. These two segments were the main growth drivers of the LV market in 2017 (+14% YoY) and 2018 (+20% YoY). The declines in August likely resulted from consumers awaiting new model launches in both segments in Q4 this year, as well as the tail-off in replacement demand, following the expiry of the restrictions governing the 2012-2013
first-time buyer scheme, as both vehicle types qualified for the tax incentive program. We cut the Thai LV forecast to 1.02 mn units for both 2019 and 2020 – unchanged from the 2018 result. The near-term risk, however, is on the downside, given the weak economy, most notably in the export sector, and the impact of this year’s drought (H1) and floods (Q3) on incomes in rural areas, which account for the majority of Thailand’s population.
LV demand in the Philippines was disrupted in August by the Chinese Ghost Festival (an inauspicious month for big-ticket purchases) among Chinese Filipinos. Despite the stronger-than-expected August result and the 2% YoY uptick in YTD sales, we have left our forecast unchanged at 388k units this year and 399k units next year, due to the country’s slowing economy. GDP growth slowed to 5.5% YoY in Q2, from 5.6% YoY in Q1, its weakest pace in over four years. Oxford Economics has trimmed its GDP growth forecasts to 5.6% for 2019
and 5.8% for 2020.
Taking these factors into account, we now expect the ASEAN market to close 2019 with 3.28 mn units sold (-3%) and forecast slight growth (+3%) to 3.36 mn units next year.
For further information contact Ms. Sukanya Tunhau
Phone +662 264 2050
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