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

 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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 Malaysian vehicle sales in 2013 increased by 4.5% from the previous year to 656,000 units. The sales have topped 600,000 units for the fourth consecutive year, setting a new record high. In 2013, Malaysian automotive market has expanded owing to economic growth of 4.5-5.0% and employment stability as well as the automakers' aggressive promotion campaigns. Sales of commercial vehicles rose 4.7% to 79,000 units while those of passenger cars climbed 4.4% to 577,000 units. Among the passenger cars, sales of SUVs surged significantly, up 50.9% over last year.

 Looking at the market shares by automaker in 2013, two national car manufacturers, namely Perodua and Proton, have maintained the first and second places. However, Perodua's share decreased from 30.1% last year to 29.9% while Proton's share dropped from 22.5% to 21.2%. They are followed by Japanese OEMs including Toyota, Nissan and Honda. Although Toyota lost its market share from 16.8% to 13.9%, Nissan expanded its share from 5.8% to 8.1%, and Honda boosted its share from 5.6% to 7.9%.

 Vehicle production in Malaysia for 2013 increased by 5.6% year-over-year (y/y) to 601,000 units, surpassing 600,000 for the first time. While production of commercial vehicles decreased by 4.1% to 58,000, that of passenger cars climbed 6.7% to 544,000. Especially, output of SUVs increased significantly to 23,000 units, 2.3 times more than the previous year.

 MAA announced their outlook in January 2014 that vehicle sales in the country are expected to increase by 2.2% y/y to 670,000 units for 2014. In tandem with an improved global economic outlook, the Malaysian economy is expected to grow. With the policy rate remaining at the current level of 3%, confidence in consumer sentiments will improve. However, as consumers' spending may be moderated in light of the expected increase in prices and tightening of lending guidelines, the growth rate of vehicle sales is projected to be lower than the previous year.

Source: MAA

 Two national car manufacturers, Proton and Perodua, accounted for 63.8% of passenger car production in Malaysia for 2013. Proton has produced 140,000 units while Perodua 207,000 units. In 2011 and 2012, two companies accounted for 74.7% and 69.9%, respectively. Most of foreign automakers produce their vehicles at the joint ventures established with Malaysian enterprises or contract out production to local assemblers.

 Among Japanese OEMs, Honda and Nissan have increased their production significantly. Honda's production rose 63% from last year to 48,000 units while Nissan's production grew 50% to 43,000 units. Toyota has manufactured 47,000 units, down 5% y/y. At the end of 2013, Mitsubishi has started local production at a plant of Tan Chong Motor, a Malaysian assembler.

 Some OEMs are planning to boost their production capabilities in Malaysia. In January 2014, Honda has added the second line at its existing plant and doubled its annual production capacity to 100,000 units. Within 2014, Hino plans to start operations of a new plant with an annual capacity of 10,000 units. Mazda also intends to start production at a new plant where the company aims to manufacture 20,000 units per year in the future. Perodua, a national car manufacturer, is expected to start operations of a new plant with an annual capacity of 100,000 units. Tan Chong Motor, which is assembling Nissan brand vehicles, plans to increase its annual capacity to 68,000 units from current 30,000 units by the introduction of new machinery and equipment into its existing plant.

Plans to boost production capacities in Malaysia

(Note) 1. Malaysian ringgit (MYR)= USD0.30 or EUR0.22 (as of mid-February 2014))

 The Malaysian government announced the revised National Automotive Policy "NAP 2014" in January 2014. The NAP 2014 plans to provide MYR 2 billion for six roadmaps including those for automotive technologies, supply chain development and human capital development. One of the key objectives of the NAP 2014 is to increase production and exports of passenger cars to 1.25 million and 250,000 units (at least 200,000 units), respectively, in 2020. The NAP 2014 also presented the strategies to make Malaysia the regional production hub for energy efficient vehicles and to reduce car prices in the domestic market.

Revised National Automotive Policy (NAP 2014)

Targets of NAP 2014 towards 2020

To make Malaysia the regional production hub for energy efficient vehicles

Reduction of vehicle prices

Source: Malaysia Automotive Institute "National Automotive Policy"

 Proton was delisted from the Malaysian Stock Exchange following the successful acquisition of 98% of the equity by new owner DRB-HICOM, a Malaysian conglomerate, in April 2012. DRB-HICOM intends to restructure Proton by integrating it into HICOM's auto production unit. The conglomerate also plans to reconstruct Lotus, Proton's unprofitable subsidiary in the UK.

 Proton's vehicle sales in 2013 decreased by 1.7% y/y to 139,000 units. According to DRB-HICOM's five-year plan for Proton, its sales target for the year ending March 2018 is set at 500,000 units.

 In 2013, Proton has released the Suprima S, a hatchback designed for the youth, and the affordable versions of the Saga and the Persona. Pursuant to the collaborative agreement with Honda, which had established a partnership with DRB-HICOM, Proton launched the new Perdana sedan for official use of the Malaysian government based on the Honda Accord at the end of 2013.

DRB-HICOM's five-year plan for Proton

Proton: launch of new models (2013)

 Daihatsu owns a 20% stake in the national car manufacturer, Perodua (Perusahaan Otomobil Kedua), along with a 41% stake in Perodua Auto Corporation that controls Perodua's affiliated production companies. Perodua's vehicle sales in 2013 increased by 3.7% y/y to 196,000 units. The S-Series affordable versions of existing models launched in March 2013 have boosted Perodua's sales. According to Daihatsu's outlook announced in January 2014, Perodua's sales are expected to grow by 1% to 197,000 units in 2014.

Perodua: launch of new models (2013)

 Japanese OEMs are aggressively expanding their line-ups for the Malaysian market. They are also boosting their local production and the import of the vehicles assembled in Thailand. In 2013, Toyota launched the Vios, the best-selling car in the small passenger car segment excluding the national cars. Honda started local production of a version of the Jazz compact car which had been imported from Thailand. The automaker also intends to increase sales of its HV models by extending warranty period for the HVs and reducing prices for the replacement batteries. Nissan launched the MPV Serena with a micro-hybrid system and the LEAF EV while Mazda began the export of the locally-built CX-5 to Thailand.

Japanese OEMs: launch of new models (2013-14)

Toyota

Honda

Nissan

Mitsubishi

Mazda

Suzuki

Isuzu

Honda extends warranty period for HVs and reduces prices of HV batteries

Mazda exports CX-5 to Thailand

 Other foreign OEMs are also diversifying their line-ups and expanding local production in Malaysia. BMW started local production and sales of the 1 Series. The company also introduced the first locally-assembled MINI model in Southeast Asia. VW launched the locally-built Polo sedan and hatchback. Ford plans to produce and sell the Transit large van in Malaysia. Tata Motors has partnered with DRB-HICOM for the import, assembly and distribution of Tata's commercial vehicles.

Other foreign OEMs: launch of new models (2013-14)

BMW

VW

Peugeot

Volvo Car

Ford

Kia

Tata Motors partners with DRB-HICOM for commercial vehicles in Malaysia

 Light vehicle production in Malaysia for 2013 was 589,900 units, representing a 4.2% increase from the previous year. According to LMC Automotive's latest forecast, production will grow by 7.2% to 632,700 units in 2014. Among OEMs, Perodua, Honda, Mazda and Hino Motors are expected to increase their output by starting operations of new plants or additional lines. Launch of local production of the BMW 1 Series, the Ford Transit, the ninth-generation Honda Accord and the Mitsubishi ASX will also support an increase in vehicle production. LMCA foresees that Malaysian production is expected to increase steadily to reach 695,400 units in 2017.

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