Source: Monthly reports of the Malaysian Automotive Association
The Total Industry Volume (TIV) for the month continued to rise for a third consecutive month, September being the first full month of business after the long forced suspension of activities. The TIV increased by 153% compared to August sales, translating to a volume difference of 26,775 units.
Of the 44,275 units, 38,315 were passenger vehicles (excluding pick-up trucks) while 5,960 units were commercial vehicles (including pick-up trucks). Pick-up trucks account for between 65% to 70% of commercial vehicle sales.
Compared to the same month in 2020, however, the TIV in 2021 was 23% lower. The gap for cumulative sales over 9 months was smaller at 7%; in the same period last year, 344,019 vehicles were sold whereas in 2021, the total number reached only 318,874 units.
According to the Malaysian Automotive Association, some companies are affected by the global chip shortage and are having delays in deliveries to customers. This situation affects CBU models as well as those that are locally assembled although not equally at different plants.
Production nevertheless has been climbing in the same manner as sales numbers, with most plants able to operate at full capacity. The government allows those factories with a minimum of 80% of their workforce fully vaccinated to carry out operations with full attendance.
The total production volume for September was 229% greater than the output in August, with 45,972 vehicles assembled. Of this number, 42,556 units were passenger vehicles.
Cumulative production from January to September reached 303,996 units, 4% lower than the 315,863 units that were assembled over the same period in 2020.
The MAA expects October sales to show continued increase as output of vehicles is pushed as much as possible, while the companies are doing their best to meet 2021 targets if possible. There are still a few new models that will be launched before the end of the year so customer interest will be high. And of course, towards the end of the year, there will also be promotions that will entice many to buy a new vehicle.
Data source: Monthly reports of Malaysian Automotive Association
With business operations in most parts of Malaysia allowed to resume after over 2 months of forced closure, new vehicle sales and production started to rise in August. However, the Total Industry Volume (TIV) recorded was only 17,500 units as showrooms began operating only from the middle of the month. The August TIV was less than half of the average monthly sales during the first month of the year.
Compared to the same month in 2020, this year’s August TIV was 35,300 units lower although it was not as bad as in June when the full MCO lockdown began. In that month, the sales volume for the whole industry fell by 42,774 units,
As would be expected, the closure of showrooms has had an impact on the cumulative volume for the year. For the first 8 months of 2021, the TIV reached 273,757 units or 12,504 units (4%) less than for the same period in 2020. This has led the Malaysian Automotive Association (MAA) to reduce its TIV forecast for the year by 70,000 units to 500,000 units. This would be almost 30,000 units lower than the TIV for the whole of 2020.
The lockdown also saw production at factories having to suspend their operations. During the lockdown months, the auto industry used the PIKAS initiative to get its workforce vaccinated in preparation for resumption of operations.
From mid-August onwards, the government permitted factories to resume operations but the number of workers allowed would be dependent on the percentage vaccinated. Those with 80% or more of their workers vaccinated were allowed to operate at 100% capacity.
From January to August, the total output from all the vehicle plants was 258,024 passenger and commercial vehicles. The same period in 2020 recorded 263,876 units or 2% higher.
With four months remaining, the car companies are hoping for the market to pick up as much as possible. To achieve the MAA’s target of 500,000 units by the end of the year means that monthly sales will have to average 56,560 units. This may well be possible if you look at the sales during the last quarter of 2020. However, in 2021, many more people and businesses have been struggling with the prolonged restrictions of movements and spending on expensive items like new cars might not be considered or possible.
As expected, new vehicle sales in July 2021 were way down, though not as rock-bottom as June when the Total Industry Volume (TIV) was under 2,000 units. As in June, the continued closure of showrooms meant that no sales could be conducted and even if they could, registering the vehicles would not be possible. However, July’s TIV was 270% or 5,465 units higher as showrooms could operate in Sabah and Sarawak so sales were possible there and accounted for the higher numbers.
Minimal bookings from online channels
According to the Malaysian Automotive Association (MAA), which has been compiling data since the 1960s, members reported that bookings via online channels were minimal. These ‘virtual showrooms’ started to appear over the past year as stricter SOPs were in force and there was also concern that customers might not be comfortable coming to showrooms. Customers can make bookings and make payments via online transfers to at least start the process. However, there are still the other things like loan applications which still need some personal interaction.
The cumulative TIV after 7 months reached 256,215 units this year, which was about 10% higher than for the same period in 2020 – and this has been with 2 months of virtually no sales. With sales resuming from mid-August, there will be a backlog to clear plus new orders so the TIV by year-end might still be higher than for 2020.
3-digit production figures
On the production side, the assembly plants have had to suspend operations too and the output fell to three digits in June but rose again in July. The disruption has been challenging for the plants which very much prefer consistent assembly. The shortage of microchips is also slowing output and as the end of the year nears, pressure will be on to deliver as many vehicles as possible because car companies are using the sales tax exemption as a selling point. It expires at the end of this year so many will want to make sure they can enjoy those savings.
Will sales pick up again?
Looking ahead, the MAA expects August sales to be better although there are only two weeks to the end of the month for sales. Furthermore, given the current situation in the country, not only with the pandemic but also the political situation, consumer sentiment may be cautious, and people will be reluctant to spend a lot.
According to MAA President, Datuk Aishah Ahmad, total losses for the local auto industry for the months of June and July have been estimated to be more than RM14 billion. “This is just only from sales of vehicles in the domestic market. Our members also lost much in terms of revenue from exports of vehicles and components, and sales of spare parts locally. All in all, these losses had been very substantial and unprecedented”, she said.
The Malaysian auto industry, like many other industries in the country, has been badly impacted by the measures taken to fight the COVID-19 pandemic since last year. Representing the new motor vehicle distributors, assemblers and manufacturers, the Malaysian Automotive Association (MAA) commends the government for its efforts to contain the spread of the coronavirus in order to save lives.
However, the MAA feels the Enhanced Movement Control Order (EMCO), Phase 1 and Phase 2 of National Recovery Program approach needs to be reviewed and re-considered, especially for key economic states like Selangor, Wilayah Persekutuan Kuala Lumpur, Perak, Johor, Penang and Negeri Sembilan. The EMCO approach had been enforced in Selangor and WP Kuala Lumpur for more than 2 weeks now while some states have transitioned into Phase 2 of the NRP.
Whole supply chain affected
“The whole supply chain in the automotive sector has been seriously affected particularly by the complete shutdown of operations in EMCO states/localities like Selangor and WP Kuala Lumpur. Feedback received from many of our members indicated that business operations – even in non-EMCO states – are hampered due to disruptions in the supply chain”, said Datuk Aishah Ahmad, President of MAA.
During the EMCO stage, not a single business activity from the automotive sector is allowed to operate, while for states under Phase 1 and Phase 2 of the NRP, the vehicle showroom and distribution centres are still not allowed to operate despite the opening up of most of the other economic sectors.
Production and distribution of automotive products (motor vehicles, components and parts) and sales of vehicles have been halted since June 1, 2021. The stoppages of all these activities will have far-reaching implications to the entire automotive ecosystem nationwide. In April last year, sales and production plummeted to almost zero when the first MCO was in force.
Implications of continuing closures
While automotive companies may suffer from loss of revenue, profitability, export markets and closure of businesses, their employees face issues such as pay cuts, loss of income (particularly for sales personnel) and even retrenchment in certain cases. The government will also lose in terms of lower revenue collected from excise duties, import duties, sales taxes and road taxes for motor vehicles.
The closures of automotive workshops and parts centres in EMCO states/localities such as Selangor and WP Kuala Lumpur will not only cause inconvenience to all vehicle owners in general but may also endanger those whose vehicles may have defects or problems. Failure to repair faulty parts in such vehicles can pose a serious risk to all road-users. These include vehicles which may be belonging to frontliners such as those in the PDRM, Ministry of Health, etc. who may encounter damages or breakdown in the course of doing their work.
With factories and distribution centres (for vehicles and parts) in EMCO states/localities unable to operate, this will disrupt the supply chain to business operations in states/areas under Phase 1 and 2 of the National Recovery Plan (NRP). As a result, the recovery efforts by the government will be negated.
Increasing damaged inflicted
The consequences arising from stoppages of the automotive factories, workshops, and distribution centres (for vehicles and spare parts) in EMCO states/localities is indeed very serious, the MAA stresses. The longer these facilities do not operate, the greater the damages inflicted on to the automotive industry in particular, and the country in general.
The MAA is therefore appealing to the government to allow automotive sector activities (workshops and distribution centres for passenger and commercial vehicles and spare parts) to operate with immediate effect albeit at certain capacity and with strict SOPs in place in states under EMCO, Phase 1 of NRP and Phase 2 of NRP.
Selangor and WP Kuala Lumpur account for close to 50% of Malaysia’s total industry volume of new vehicles each year. Many of the key automotive companies for both production of vehicles and components are located within these two states. In addition, some MAA members also have their sole and or central distribution centre (for vehicles and spare parts) located within the Klang Valley.
In addition, to reduce congestion at ports, the MAA is proposing to allow a window of two to three days per week for receiving and storing cargos for the automotive sector similar to what was practiced during MCO 1.0 last year. The Malaysian automotive industry is heavily dependent on the domestic market. Export markets exist but are insufficient to sustain the industry.
Data for 2021 does not include Mercedes-Benz sales as the company does not wish to release its numbers. Source: Monthly reports of Malaysian Automotive Association.
While the Total Industry Volume (TIV) for May 2021 was double the TIV for the same month in 2020, the decline was beginning as the nationwide Movement Control Order (MCO) required non-essential businesses – including car showrooms – to be closed from May.
The Hari Raya festive period also reduced the number of working days and saw the TIV for May (46,663 units) being 19% lower than April.
90% of new vehicle sales were passenger vehicles, excluding pick-up trucks. This is also mirrored in the cumulative TIV for the first 5 months of 2021 which reached 245,932 units. During the same period in 2020, the TIV was 128,790 units due to the stoppage of businesses when the first MCO was implemented.
Source: Monthly reports of Malaysian Automotive Association
The vehicle output at the assembly plants also fell with the effects of the global shortage of microchips hampering production for some brands.
The total output of 42,522 units was 18% lower than in April or almost 9,000 units difference.
Cumulative output for 5 months was 240,998 units, or 117,142 units more than for the same period last year.
The MAA expects sales in June to be minimal and composed of companies carrying forward invoicing from May. No new vehicle sales can be conducted throughout June as showrooms must remain closed. Furthermore, agencies handling vehicle inspections or registration are also closed or working at reduced capacity.
Every industry is facing challenges with the current COVID-19 pandemic, and the auto industry in Malaysia is no exception. The government has tried to strike a balance between strict conditions to cut the chain of infection and avoiding a major impact on businesses and the economy of the country. To do this, it has had engagement sessions with representatives from leading chambers of commerce, business associations and trade organisations.
The Malaysian Automotive Association (MAA), which represents new motor vehicle distributors, assemblers and manufacturers in Malaysia, commends and appreciates all the efforts by the government to tackle the problems caused by the Covid-19 pandemic. It also applauds the government for listening to the various stakeholders including the business communities and industry players.
“The MAA also expressed the local automotive industry views and concerns at the engagement session. We highlighted that the Total Industry Volume (TIV) in April 2020 fell to an all-time low of 152 units, the lowest ever monthly TIV recorded by the industry over the past 50 years. This happened when all automotive business operations stopped due to the nationwide implementation then of MCO1.0 from March 18, 2020 till May 3, 2020,” said Datuk Aishah Ahmad, President of the MAA.
She added that motor vehicles play an important role in the country’s economy as they are needed to complete the entire supply chains of all businesses and industries.
Unlike last year when everything came to a standstill, the auto industry is allowed to continue operating but with strict SOPs. They can still sell new vehicles as well as provide aftersales services to customers. The assembly plants can also continue with their operations.
After getting feedback from various stakeholders, the government had decided not to impose a nationwide total lockdown again. Businesses and economic sectors are allowed to continue to operate during MCO 3.0 albeit with much more stringent SOPs.
Businesses and industries including MAA members accept the decision by the government to impose a much more stringent SOPs including limiting employee attendance capacity to only 60% at any given time, banning certain non-essential activities and restricting the movement of people during the enforcement of MCO3.0. “We recognise that such tough measures and rules are necessary to protect lives as well as the people’s livelihoods,” she said.
The MAA also acknowledges the dynamism of the COVID-19 pandemic which may cause the government to make constant changes to the SOPs from time to time. “On our part, we have urged all MAA members to give their fullest support and cooperation to the authorities. We also urged all our members not to treat the COVID-19 virus lightly. The virus is highly dangerous and can cause illnesses to infected people and in the worst case, death.”
Source: Monthly reports of Malaysia Automotive Association
A year ago, new vehicle deliveries stopped as the first Movement Control Order (MCO) was in force although 141 vehicles still reached their customers. A year later, although the MCO is still in force in varying degrees, sales and deliveries continue and in April 2021, the Total Industry Volume (TIV) was the third highest in 12 months with 57,912 units registered.
Cumulative sales for the first four months of this year compared to the same period in 2021 were 89% higher,as would be expected with sales in March and April 2020 having been impacted severely and dropping to the lowest level ever.
For some brands, new vehicle supply was also a factor in April sales being 12.3% lower than March due to the global shortage of computer chips used in the many electronic systems in cars today.
On the production side, it was the same thing a year ago as plants were also ordered to stop operations and only 275 units were reported to have been completed in April 2020. This year, 51,390 vehicles were assembled locally during the same month. As mentioned earlier, shortage of computer chips – a crucial item – saw production dropping diminishing.
93% of vehicles assembled locally were passenger vehicles (excluding pickup trucks).
It should be noted that the as Mercedes-Benz Malaysia does not wish to reveal its sales numbers, they are not included in the data above.
Forecast for May
The Malaysian Automotive Association expects the TIV to continue falling, and May registrations are likely to be lower than April. Although the latest MCO allows for businesses and factories to continue operating, stricter controls on public movements may dampen sales.
Besides the effects of the MCO, the Hari Raya festive period would also be a factor in diminished sales volume. Additionally, supplies of vehicles are also likely to remain affected by the chip shortage.
After a slow start to the new year, new vehicle sales jumped 30% in February as the buying mood returned, pushing the Total Industry Volume (TIV) to 42,784 units. Of this number, 4,861 units were commercial vehicles )including pick-up trucks). The segment volume was 30% higher than last year, possibly because a year ago, concerns about the pandemic were growing and businesses would have suspended purchases as a precaution.
The higher TIV was also attributed to the easing of the Movement Control Order in some states, making it possible for customers to go to showrooms if they wished. However, many companies have made a big push towards online marketing and have many processes which replace traditional practices where the customers had to personally come to the showroom.
Launch of the Iriz R3 Limited Edition (pictured) and Saga R3 Limited Edition, as well as Special Editions of the Persona and Exora generated excitement in the market in February.
The backlog of orders for some models also contributed to the increase in new vehicles registered in February. Late last year, sales were brisk and popular models were in short supply and just as when there was the GST-free period some years back, the plants could not ramp up production quickly to meet the sudden rise in demand.
The response from the production side seems to have gained momentum as February output of 45,199 vehicles was a 14% increase compared to January output. And compared to the same month in 2020, the output this year was 12% higher, with commercial vehicles registering a jump of 57%.
For the month of March, it is likely that the TIV will still be climbing, especially if the pandemic situation keeps diminishing in severity and public confidence becomes stronger. March is also the final month for some companies to make the final push to get the best business results for their financial year which ends on March 31.
The appeal of new models being launched will also bring more sales to companies like Perodua which began deliveries of its new Ativa SUV in early March. At the time of writing, we are aware of a couple of other models that will be launched this month too so there should be higher consumer interest which will continue up to the Hari Raya festive period.
Source: Monthly sales reports compiled by the Malaysian Automotive Association (MAA). The Total Industry Volumes shown for the month may be incomplete as some companies are unwilling to provide their sales data.
♦ New vehicle sales in the first month of the year were 32,829 units, 51% lower than for December 2020, and 24% lower than the same month in 2020.
♦ The decline was due to a few factors, among them the surge in purchases in December by those who did not want to miss out on the sales tax exemption. It was originally set to expire on December 31, 2020 but at the last moment, the government decided to allow an extension until June 30, 2021.
♦ The large number of sales in December would have exhausted the order bank for the following month on the one hand, and companies also ran low on stocks due to the high demand at the end of the year. For a change, some customers did not choose to defer their delivery date to the new year.
♦ Difficulties in deliveries due to dealers being unable to get stocks also kept the Total Industry Volume (TIV) down. The disruption caused by the ongoing MCO affected some suppliers of parts or systems and without just one item, a car cannot be completed at the assembly plant.
♦ January sales were also impacted by the restrictions of the MCO which limited travel distance to 10 kms from home. However, many companies have established and publicised their ‘online showrooms’ which can at least enable buyers to start the purchase process. Some companies also offer to bring vehicle over for test-drives and even deliver newly registered vehicles to the doorstep using a dedicated transport service.
♦ Sales of new commercial vehicles were higher in January 2021 compared to a year earlier. Almost 4,000 vehicles (including pick-up trucks) were delivered whereas, in January 2020, 3,532 units were delivered.
♦ The MAA expects February sales to be even lower, given the short month and the ongoing MCO which affects businesses in various ways.
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The severity of the COVID-19 pandemic forced governments to put their countries into lockdown, which meant that industries and businesses had to close. Malaysia didn’t escape the economic downturn that resulted, though good management at the start helped to bring the numbers down and the situation under control. This allowed the country’s economic sector to restart and slowly recover, aided by a recovery program which covered many sectors.
For the Malaysia auto industry in modern times, 2020 was the worst year in its history which goes back to the 1960s when the first local assembly of vehicles began. There had been a few recessions but even though they were challenging with a contraction of the market, there wasn’t a total shutdown as was experienced last year. Activities could still continue and each company had its own strategy to weather the downturn, which veterans knew would pass. And while there was loss of jobs, there wasn’t the fear of death or sickness too.
PENJANA was a big help
The PENJANA program by the government to help the economy recover began in the middle of the year and for the auto industry, the support given was in the form of exemption of the 10% sales tax, reducing the price at point of purchase. It was a straightforward incentive – 100% of the tax for models assembled locally (CKD), 50% for those imported CBU (completed built up).
The incentive worked well as sales quickly rose and stayed above 50,000 units a month during the second half of the year. In fact, the final quarter was exceptionally strong, averaging 61,373 units a month compared to 53,765 units a month for the quarter before.
All data and charts provided by Malaysian Automotive Association.
Consistently high numbers in second half
Nevertheless, the Total Industry Volume (TIV) for 2020 was expected to be lower than the 604,281 units recorded in 2019 and in the first half of the year, many would have expected it to be significantly lower. However, with the consistently high numbers in the second half of the year, the TIV closed at 529,434 units, 12% lower than 2019 but well past the forecast of 470,000 made by the Malaysian Automotive Association (MAA).
However, when the year had started, the MAA had actually forecast 607,000 units for the year, but revised it substantially downwards by 23% as the seriousness of the pandemic and its impact on the industry became clear.
The monthly TIV reached its peak in December 2020 when a total of 68,836 units were registered. The exceptional high TIV in December 2020 was due to consumers buying forward in anticipation that the tax exemption incentive (only for passenger vehicles) expiring on December 31, 2020, as original announced. However, it has been extended to June 30,2021.
“MAA would like to express our heartfelt and sincere appreciations to the government in general and the Ministry of Finance and Ministry of International Trade & Industry in particular for listening to the industry’s plights and providing us with all the supports (especially the PENJANA package incentive) to ensure the continuance of business activities and the survival of the industry,” said Datuk Aishah Ahmad, President of the MAA.
By segment, passenger vehicles (excluding pick-ups) declined by 12.6%, which was higher than for commercial vehicles (including pick-ups) which declined by 10.4% Production of new vehicles in 2020 seemed to be impacted by the forced shutdown of every factory in the country for about 2 months but when allowed to resume operations, the carmakers worked harder to meet not only outstanding orders (for high-volume brands like Perodua and Proton) but also increasing demand in the second half of the year. By year-end, the production volume was 15% lower than the output in 2019.
Total Production Volumes in 2020 and 2019.
Looking ahead
As always, the MAA takes feedback from its members and also factors in economic and environmental situations when looking ahead. It is optimistic that 2021 will see the local economy recovering in tandem with the global economy, which can boost sales. Certainly, the continuation of the sales tax exemption will help, along with more consumer confidence to spend on items like new vehicles.
Lower hire purchase (H-P) interest rates will also help, complemented by the introduction of new models which the companies will be offering at prices that will be ‘in tune’ with the times. While the industry may have come to a standstill in one sense, activities continued behind the scenes and whatever projects were underway would have only been slightly delayed.
So, for 2021, the MAA is forecasting an increase of 100,000 units from its 2020 forecast, which is 8% higher than the actual TIV achieved. Strong growth (18%) is expected in the commercial vehicle segment which will continue to require vehicles for the various projects underway around the country.
Looking further ahead, it appears that the MAA expects the strong demand to continue into 2022 with an increase of 6% to take the TIV past 600,000 units again. Thereafter, from 2023 – 2025, growth will be at a slower rate of 3% to 3.2% annually. Hopefully, the pandemic will have diminished significantly and normalcy has returned.
