Industry analysts at Frost & Sullivan predict the year 2019 is looking optimistic for the Malaysian automotive market, as vehicle sales in the country is expected to witness commendable growth. In a recent GIL Briefing in Kuala Lumpur, Associate Partner and Senior Vice President of Mobility Practice at Frost & Sullivan, Vivek Vaidya presented the overview and predictions of the automotive market in Malaysia.
2018 Review: Impressive Growth at 4.8% in Total Industry Volume
The automotive market in Malaysia observed decrease in Total Industry Volume (TIV) in 2016 and 2017, but has grown in 2018 at 4.8% rate. This positive change is a result of higher wages and tax holidays in Malaysia, which consequently drive positive consumer sentiments that provided the welcome boost.
“The tax holiday announced in May 2018 following 0% GST and the removal of GST in June 2018 boost sales exponentially well into August 2018. However, sales began to decline post-tax holiday and reached its lowest in September 2018 before rising again during the year-end promotion from October to December 2018,” noted Vaidya.
On top of tax holiday enjoyed country-wide, the introduction of new models along with on-going promotional campaigns by carmakers also contributed to the rise in TIV in 2018.
The SUV segment grew at 19.5% year-on-year in 2018, as the market witnessed new model launches from carmakers such as Proton X70, Renault Captur, Kia Sorento, and many more. Other segments of the passenger vehicle market such as passenger cars and window van also grew at 5.1% and 18.6%, respectively, year-on-year. However, MPV segment declined by 13.2% year-on-year despite launch of new models or facelifts such as Kia Grand Carnival, Nissan Serena S-Hybrid and Proton Ertiga.
Not surprisingly, Perodua maintains its position as the leader in passenger car segment due to high demand of the carmaker’s popular models, Axia and Bezza. Proton witnessed an increase in market share of 41.5% in 2018, which places it in the number one spot. Coming in second is Honda with 19.7% market share, which witnessed decline despite the launch of refreshed version of Odyssey MPV. In the third spot is Proton with market share of 12.2%, which also suffered decline despite new model launches in MPV segment. The carmaker’s SUV launch toward the end of 2018 also failed to stem declining numbers.
2019 Outlook: Key Factors Likely to Impact the Malaysian Automotive Market
Vaidya highlighted three key factors likely to impact the automotive market in Malaysia in 2019: growth in domestic consumption, growth in private investments, and new model launches.
“Increase in wages and strong labour market with stable interest and fuel rates indicates increase in disposable income. This will likely lead to positive consumer sentiments to spend more,” commented Vaidya. “Consequently, this will have high impact in the passenger vehicle segment, medium impact in commercial vehicles, and low impact in luxury vehicles.”
Furthermore, Vaidya also touched on possible market restraints to watch, mainly weakening of Ringgit Malaysia (RM) and slowdown in Government spending.
“With weakening ringgit luxury cars would become more expensive while commercial vehicle performance depends on external sector and government spending,” noted Vaidya.
All in all, Frost & Sullivan forecasts Malaysia TIV to reach 609,700 units in 2019 at a growth rate of 1.4%.