Malaysia: New vehicle sales to increase 2.2% to 670,000 units in 2014

New National Policy to make Malaysia regional hub for energy efficient vehicles



Vehicle production and sales in Malaysia Malaysian vehicle sales and production in 2013 increased to 656,000 and 601,000 units, up 4.5% and 5.6% from the previous year, respectively. Both sales and production set the record highs. Malaysian Automotive Association (MAA) forecasts that vehicle sales in the country will reach 670,000 units in 2014. However, the growth rate is expected to drop to 2.2% due to inflation and tighter lending guidelines. New National Automotive Policy announced in January 2014 has the objectives to raise passenger car sales and production to 1.0 million and 1.25 million units, respectively, in 2020. The policy also presented the strategies to make Malaysia the regional production hub for energy efficient vehicles and to reduce car prices in the domestic market.

 According to LMC Automotives, Malaysian light vehicle sales in 2013 rose by 3.3% year-on-year to 644,800 units. While household spending is forecast to remain solid in 2014, its growth is likely to be constrained by rising inflation, a further hike in subsidized fuel prices, and higher debt servicing costs. Looking ahead, LMC Automotive forecasts that slower government spending and private sector demand is expected to be partly offset by a stronger export performance. Light vehicle sales in 2014 are forecast to grow by 5.9% to 682,800 units. LMCA anticipates that the Malaysian vehicle sales will continue to increase in and after 2015 and is expected to rise to 753,900 units in 2017. It is increasingly clear, however, that risks to a whole basket of emerging markets are skewed to the downside as Federal Reserve asset purchase tapering have created unstable capital and currency flows.

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