Malaysia Eked Out Sales Record in 2015, But Drop Seen for 2016

Driven by a record December, Malaysia's car industry eked out a 0.3% gain year-on-year to a best ever 666,674 units in 2015, topping the high-water mark set in 2014 by just 187 units.

But Malaysian Automotive Assn. President Aishah Ahmad says the effort won’t be repeated this year, with the association expecting demand to drop 2.5% to 650,000 units in 2016.

The government’s Bernama news service quotes her as saying the strong 2015 performance is attributed to factors such as the normalization of vehicle sales after the debut of the goods and services tax, the introduction of new models and aggressive sales campaigns by car companies.

“Challenges, however, remain for this year with the persistently weak ringgit continuing to affect business confidence and consumer sentiment," Aishah says.

The MAA expects sales in 2017 to reach 669,500 units, climbing to 686,200 in 2018, 702,000 in 2019 and 717,444 in 2010.

MAA data show December sales rose 7.3% to 69,401 units from year-ago’s 64,660. This was just enough to push the full-year result to a record level.

New-car sales gained 10.1% in December to 61,132 units for a 12-month total up 0.05% to 591,298.

The commercial-vehicle segment fell 9.4% in December to 8,279 units for a full-year total that is down 3.5% at 75,376.

Malaysian production increased 3.1% for the year to 614,664 units, with car output up 3.4% to 563,883 and CV production down 1.0% at 50,781.

Perodua retained its crown as market leader with 213,307 units, well ahead of Proton with 102,175.

Perodua President Aminar Rashid Salleh says in a statement the company is aiming for 216,000 units this year. He says Perodua has no plans to follow other automakers and raise vehicle prices in the near term, despite the weakening of the ringgit against the dollar and yen.

Industry analyst Frost & Sullivan sees Malaysia’s 2016 new vehicle sales falling to 648,000 units.

Frost & Sullivan Vice President of Mobility Vivek Vaidya says the projected decline in total industry volume will be due to economic pressures, the weakening ringgit, price increases and the tightening of credit approvals.

“OEMs are compelled to increase the prices due to rising costs,” he says. “If the crude oil price continues on its downward spiral, the ringgit also will continue to weaken, putting immense pressure on OEMs as well as component suppliers.”

The Frost & Sullivan report says the market will be helped by the launch of several key models in 2016.

“The continuation of various incentives under the National Automotive Policy based on EEVs (enhanced environmentally friendly vehicles) and localization will also help OEMs in increasing their competitiveness and in maintaining their prices.

“New and exciting model launches coupled with promotions would be the go-to strategy for OEMs,” Vaidya says.

“Despite several OEMs reducing the prices of cars after the implementation of GST, the economic downturn, weakening ringgit and increase in cost of living and cost-of-ownership discouraged buyers from making big purchases.”