Malaysia LV Sales Expected to Build on 2013 Gains

Positive economic conditions and a steady investment flow are expected to push Malaysian vehicle sales up 4.2% this year to 675,000 units, industry analyst Frost & Sullivan predicts in a new report.

Kavan Mukhtyar, Frost & Sullivan partner and head of automotive and transportation practice- Asia Pacific, says the government’s much-awaited national automotive policy, expected to be announced in mid-January, will be the catalyst to move the local industry forward through a 2-pronged approach and transform Malaysia into a production hub for energy-efficient vehicles by 2020.

“There will be more clarity on the direction of the local automotive industry post-(policy) announcement, which is the industry roadmap for improving competitiveness, increasing investments and export growth,” Mukhtyar says in a statement.

However, he says a continued tightening of credit and subsidy rationalization could curtail vehicle-sales growth. Mukhtyar expects automakers to adopt a cautious approach and await policy clarity after the government announcement.

Frost & Sullivan expects vehicle sales in 2013, to be announced later this month by the Malaysian Automotive Assn., to grow 3.2% ahead of prior-year to 648,000 units, mainly driven by continued positive consumer sentiment and the launch of several new models.

Mukhtyar predicts the final figures will show Perodua leading the car market with a 33.8% market share, while Proton could see its share fall 1 percentage point. Toyota’s share is forecast to have fallen to 10.6% in 2013 from 13.4% in 2012, largely due to the delayed launch of the new Vios, stock unavailability of the Altis and fierce competition in the C segment.

Honda’s aggressive presence in the market likely resulted in a 2.4-percentage-point jump in share, he says, while Nissan likely boosted its sales 3 percentage points.

Mukhtyar says strong domestic demand aided Malaysia’s commercial-vehicle segment and he predicts the final figures will show 2.2% year-on-year growth to 77,300 units. He notes Toyota’s best-selling Hilux pickup ensured its overall dominance in the CV market with a 38.1% market share as Japanese automakers accounted for nearly 85% of the segment.

“Ford is likely to see a 4.4-percentage-point jump in its share with its new 2.2L Ranger model that is positioned as a tough yet stylish, high-performance pickup truck,” Mukhtyar says.

Malaysia’s development as a hub for energy-efficient vehicles, expected to be a centerpiece of the new national automotive policy, is a step in the right direction and is in line with global trends, Mukhtyar says. “With a more attractive incentive framework, the EEV program is expected to generate more investments for the local automotive sector and usher it into a new growth phase.”

Both Indonesia and Thailand already have well-established green-vehicle policies, he says, and global automotive investors have several options.

“If Malaysia is able to swiftly implement the new policy, then it has an opportunity to attract investments,” Mukhtyar says. “However the window of opportunity is short as Thailand and Indonesia are both pursuing these investments. Malaysia will need to rapidly create a favorable demand and supply ecosystem.”

Frost & Sullivan predicts sales of hybrids grew 4% year-on-year to 16,000 units in 2013 due to duty exemptions and new-model launches.

Mukhtyar remains optimistic about hybrid-vehicle sales, citing a Frost & Sullivan study showing most Malaysians strongly prefer greener vehicles provided the purchase is economically viable.