Malaysia is the third largest commercial vehicle (CV) market in Asia-Pacific after Thailand and Indonesia and the country’s CV market is experiencing the beginning of rapid growth phase driven by expanding infrastructure and entry of new market players.
According to a forecast report by Frost & Sullivan, the Malaysian CV market is expected to experience positive growth despite challenges related to the depreciating Ringgit value and higher retail fuel prices, which increased inflation. In fact, Original Equipment Manufacturers (OEMs) can overcome these challenges due to the various trends that support the growth of the CV market.
Trend 1— Increasing Investments in Infrastructures
The development of key projects such as building and upgrading roads and bridges along with residential construction in urban areas under the PRIMA/Rumah Mesra Rakyat scheme will trigger the demand for CVs, especially HCVs and MCVs. Additionally, Malaysian government’s emphasis to promote public transportation system will also propel the CV market as this will push the demand for city buses.
Trend 2— Demand Shift from C-segment to Pickup Segment
There has been a significant increase in preference for pickups compared to C-segment vehicles since 2015. It is likely that this shift has been triggered by the multiple features that pickup trucks offer such as attractive models with advance features at reasonable price. Additionally, reliability and high resale value also contribute to the promising factors that push the demand for pickup trucks further.
Trend 3—New Market Entrants
The market’s sensitivity towards price hikes and rising inflation has been restricting the growth of CV market. However, this trend encourages Chinese and Indian OEMs as they offer products with competitive features and technologies at reasonable price compared to their Japanese and American counterparts. Consequently, their effort to reach price sensitive-customers with advanced CVs helps to expand the total industry volume.
Trend 4—Trade Agreements
The expected implementation of Regional Comprehensive Economic Partnership (RCEP) is also optimistically driving Malaysia’s CV industry. Its implementation is likely to have a tremendous positive impact on CV market growth as imports become cheaper and exports easier.
Trend 5—Increasing Customer Preference towards brand New Purchase
The increase in the market’s preference to brand new purchase will drive Malaysia’s CV market further. Customers’ inclination towards brand new purchase is largely contributed by advanced technologies, better features and reliability of CVs. Moreover, the possibility of the B10 biodiesel mandate being implemented by the government will also boost the market share for new CVs as owners will need to replace their vehicles to adhere to the new mandate.
With all these positive trends, the CV market of Malaysia looking optimistic and is expected to experience a growth at a CAGR of nearly 3%, which translates to more than 84,000 units sales of CVs by 2025. Learn more on Strategic Analysis of Malaysian Commercial Vehicle Industry, Forecast to 2025.
Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at email@example.com