Motion Digest Network

New vehicle sales in South-east Asia’s six largest markets rose by 10.6% to 781,162 units in the second quarter of 2016, from 706,532 units in the same period of last year, according to data collected exclusively for just-auto by AsiaMotorBusiness.com.

This follows a 3.6% decline in the first-quarter of the year, resulting in a 3.2% rise in cumulative first-half sales to 1,518,636 units, from 1,471,931 units a year earlier. The region’s improved performance in the second quarter reflects rebounds in its two largest markets.

The data do not include some import sales in Vietnam and the Philippines which are not included in the main trade associations’ statistical reports.

The region’s largest market, Indonesia, saw its sales rebound by 8.9% to 264,700 units in the second quarter, resulting in a 1.2% rise in first-half sales to 531,900 units. Here, GDP growth has picked up moderately, helped by interest rate cuts by Bank Indonesia and rising investment.

Thailand also enjoyed a sales rebound in the second quarter, by 8% to 185,055 units, resulting in a slight 0.7% decline in first-half sales to 366,373 units. Here too, economic growth picked up momentum in the first quarter, reflecting higher government spending, strong tourism growth and a moderate recovery in exports.

Malaysia’s new vehicle market continued to decline in the second, however, by 6.3% to 144,194 units, with first-half sales falling by 14.5% to 275,459 units. Economic growth slowed to 4.2% in the first quarter, from 5% in 2015 and 6% in 2014, driven lower by declining exports and weakening investment growth.

The region’s smaller markets continued to outperform, reflecting continued strong economic growth. Sales in the Philippines rose by over 27% to 167,481 units, after growing by 22% in the first quarter, while first-half sales in Vietnam rose by almost 35% to 123,661 units.

The new vehicle market in Singapore continued to enjoy a strong cyclical rebound after many years of decline, driven mainly by a sharp fall in registration taxes.

 

Indonesia

New vehicle sales in Indonesia rebounded strongly in the second quarter of 2016, by 8.9% to 264,700 units from weak year-earlier sales of 243,100 units, according to data compiled by local industry association Gaikindo.

New models are driving the market forward, including the Honda BR-V, Toyota Innova, Avanza and Fortuner, Daihatsu Xenia and the Mitsubishi Pajero Sport.

The latest economic data available, for the first quarter of the year, shows GDP growth of 4.9%, slightly higher than the 4.8% growth rate of 2015. The government is optimistic that growth will pick up moderately in subsequent quarters, resulting in full-year growth of 5.2%.

Bank of Indonesia has cut its benchmark interest rate from 7.5% at the beginning of the year to 6.5% in July to help lift consumer spending. Further cuts are expected in the coming months.

The government’s recently launched a tax amnesty for offshore funds, which is expected to help lift inward investment in the country over the next two years. This should also benefit the local currency and help reduce inflation.

Gaikindo stands by its full-year market forecast made at the beginning of the year for moderate sales growth of 4-8% to between 1.05-1.10 million units.

 

Thailand

New vehicle sales in Thailand increased by 8% to 185,055 units in the second quarter of 2016, from 171,375 units a year earlier, according to the collected by the Federation of Thai Industries.

Economic growth in Thailand accelerated to 3.2% year-on-year in the first quarter of 2016, the latest period for which data is available, from 2.8% in the previous quarter. This reflects a pick-up in export activity during the first quarter, although they went into reversed in the second quarter, higher government spending and strong growth in the tourism sector.

Private consumption growth slowed moderately in the first quarter, held back by depressed rural incomes and the fading benefits of previous stimulus programs. Investment has also declined in the country, reflecting the uncertain domestic and global growth outlook.

Bank of Thailand’s benchmark interest rate is already at a historic low of 1.5%, but a further cut is possible in the coming months if domestic consumption fails to gain traction.

The Federation this month is reviewing the full-year 2016 market forecast it made at the beginning of the year, of a 5-6% drop in sales to around 750,000 units. This will likely be revised upwards based on the strong second-quarter data.

 

Malaysia

Malaysia’s new vehicle market continued to decline in the second quarter of 2016, by 6.3% to 144,194 units from 153,948 in the same period of last year, according to data released by the Malaysian Automotive Association (MAA).

The market is coming off record highs of 666,674 units last year and buying activity has come under pressure from a sharp slowdown in the country’s economic growth. First-quarter GDP growth slowed to 4.2%, from 5% in the whole of 2015 and 6% in 2014.

Declining exports and weak investment growth continued to put pressure on the country’s economy, more than offsetting moderate growth in private and public sector consumption.

The Malaysian central bank cut its benchmark interest rate by 25 basis points to 3.0% in June to help stimulate domestic demand and further cuts are likely in the coming months.

In view of the continued weakness in the vehicle market, the MAA has revised down dramatically its full-year market forecasts. It now expects total vehicle sales to decline by 13% to 580,000 units this year, compared with its previous forecast of 650,000 units, reflecting weaker domestic and the increasingly uncertain global growth outlook.