In spite of the severe downturn that the car industry suffered earlier in the year due to suspension of business activities nationwide, it seems that sales are presently pretty good. In fact, up till November, Perodua has already delivered over195,000 vehicles and expects to meet its 210,000-unit registration target by the last day of 2020.
The strong momentum continued to be evident in November as the Malaysian carmaker reported sales of 23,119 units. On Monday, the last day of the month, its outlets registered a combined total of 5,027 units – the most ever in a single day.
“Our November sales represents a slight normalising from the previous two record months we had – 25,035 units in September and 26,852 units in October,” explained Dato’ Zainal Abidin Ahmad, Perodua’s President & CEO.
“Yet the accomplishment is impressive, given the challenging economic climate and ‘new normal’ operating procedures brought about by COVID-19. And our 5,027-unit one-day record shows what resilience, persistence and adaptability can bring,” he added.
Top three models – Axia, Myvi and Bezza
Axia deliveries, totalling 6,318 units were the highest among the five Perodua models, followed by the Myvi with 6,295 units and the Bezza with 6,224 units. Deliveries of the Aruz and Alza totalled 2,617 units and 1,665 units, respectively.
In November, the model with the highest number of deliveries was the Axia.
“Perodua’s two main priorities at present are to ensure as many of our valued customers as possible can get their cars before year-end to enjoy the sales tax-exempt prices; and to further bolster the Malaysian automotive ecosystem with our economies of scale in these hard times,” Dato’ Zainal said.
Supporting the ecosystem
“Over 90% of our components are locally-sourced, and coupled with our sales volume, this generates significant business for Malaysian component suppliers and helps them sustain jobs,” he added. “The completed cars are then distributed through Malaysia’s largest car sales network, the majority of which constitute independent dealers that benefit greatly from the business, and even more if they do servicing and repairs as well.”
Dato’ Zainal said Perodua is proud of its national duty and will continue to serve all Malaysians’ mobility needs with quality vehicles that are safe, practical, efficient and offer the best value, while pushing the boundaries of technology for the masses in the future.
Source: Monthly reports of Malaysian Automotive Association (MAA)
♦ The upward trend seems to have flattened out with October’s Total Industry Volume (TIV) less than 1% higher (226 units) than the TIV for September. No doubt, the reduction in the cost of buying a new vehicle due to the government’s Sales Tax exemption incentive still helps encourage sales and when compared to the same month in 2019, this year was 5.2% better.
♦ The TIV for the period from January to October has almost reached 400,000 units, reached 398,159 units to be exact. With two months remaining to hit the MAA’s 470,000-unit forecast for 2020, can the monthly TIV for November and December average 36,000 units? Since July, it has been above 50,000 units.
♦ Of the 56,670 units registered, 86% were passenger vehicles (excluding pick-up trucks).
♦ The output from the plants rose more substantially to 58,631 units in October to meet the higher demand and to also build up stocks for the end of the year period. It is likely that December will see a rush to take delivery so as to enjoy the sales tax exemption, This would be unusual as many customers often want to defer to the new year.
♦ One thing that could dampen sales a bit would be the uncertainty surrounding the COVID-19 pandemic. While the government is reluctant to impose a full-scale MCO like what we had in March and April when businesses had to shut down completely, there may be areas where stricter conditions are imposed, especially in the Klang Valley where there is the largest number of vehicles sales.
♦ The MAA does expect some softening of the market in the light of a broader impostion of the CMCO and says that members have reported a slowdown in showroom traffic. Nevertheless, many companies now have online facilities for customers to know more about products and then make bookings as well, so at least the initial phase of transactions has been addressed in the ‘new normal’.
Source: Monthly reports of Malaysian Automotive Association (MAA)
Source: Monthly reports of Malaysian Automotive Association
♦ The government’s Sales Tax exemption incentive continued to encourage many to buy new vehicles in September, pushing the Total Industry Volume past 56,000 units. In fact, it was 26% higher than the same month in 2019.
♦ Of the 56,444 units registered, 9.7% were commercial vehicles which includes pick-up trucks.
♦ Cumulative sales after 9 months have reached 341,489 units, To achieve the MAA’s 470,000-unit forecast for 2020, the industry must sell an average of 42,837 units in the remaining 3 months. Since July, the monthly sales have been over 50,000 units so the question will be whether this level can be sustained until the end of the year?
♦ Production rose slightly as most plants assembled as many units as possible to meet the higher demand. The output rose of 51,987 units was 15% higher than the same month in 2019, but output of commercial vehicles was lower by 26%.
♦ October numbers could be lower as the burden of making monthly instalments has resumed with the cessation of the loan moratorium that was provided by the banks as a form of assistance during this pandemic period. Furthermore, the imposition of the CMCO for two weeks in the month (if not longer) in the region with the most new vehicle sales may have an effect too. However, unlike the situation in March when all car companies had to suspend all activities, businesses can presently continue operating and relevant government agencies also process new vehicle registrations.
Source: Monthly reports of Malaysian Automotive Association
♦ It should be noted that the sales volume shown for August does not indicate the Total Industry Volume (TIV) as some companies have chosen not to share their data on a monthly basis and will only do so on a quarterly basis.
♦ Although the August sales volume was 8% lower than July’s, the government’s Sales Tax exemption incentive continued to help boost sales as the same month in 2019 registered 3% lower sales.
♦ Cumulative sales after 8 months have reached 285,045 units, 28% lower than for the same period in 2019 but a slightly narrower gap compared to the January – July period for both years.
♦ To achieve the MAA’s 470,000-unit forecast for 2020, the industry must sell an average of 46,238 units in the remaining 4 months. The 52,800 units sold in August were therefore above that level but can high volumes be sustained till the end of the year?
♦ Production rose again as the plants could resume normal production capabilities and respond to the increased demand. The output rose by 5.4% to 50,228 units which comprised 47,934 passenger vehicles and 2,294 commercial vehicles. However, the loss of almost 3 months of production has put the cumulative output 31% behind that of 2019 in the same 8-month period.
When automotive historians look back on 2020, it will be regarded as a dark period for the industry. Factories had to shut down for long periods, along with showrooms, and sales came to a standstill for a couple of months. It was an unprecedented situation; even during the worst recessions, business still continued.
However, it appears that the industry is recovering steadily and where the Malaysian market is concerned, the Total Industry Volume of new vehicles sold exceeded 50,000 units for the second month in a row. That’s partly due to the government exempting sales tax, which lowers the retail price, but there would also have been people who had to defer their purchases in March and April.
Market share estimated at 21.7%
For Proton, things have been going well with yet another great month – its second best – in August. During the month, 11,378 units were sold, an improvement of 24.7% over the same month in 2019. With this volume, the brand’s market share for the month is forecast at 21.6% while its year-to-date market share is estimated to be 21.7%.
With 61,672 sales so far in 2020, Proton‘s cumulative sales volume after 8 months is 46 units ahead of the same period from the previous year. The achievement is particularly noteworthy as sales in March, April and May were affected by the Movement Control Order (MCO).
The company also states that three of its models were sales leaders in their respective segments although we wonder how they determine that when the official data for individual model sales of other brands is not released. In any case, the powerful Competition Commission makes it an offence to share such information. This was declared some years back with the Competition Commissioner saying that if such data is shared by the industry, ‘the prices of spare parts will go up’. As a result, the Malaysian Automotive Association stopped releasing model sales data and the data can only be made public 12 months later.
“Proton is pleasantly surprised by how quickly we have been able to recover the lost sales during the MCO period, as it only took us three months to get back on track. By exceeding our YTD volume in August 2019, we are quietly confident of recovery from the headwinds of COVID-19. The positive effect this has on the company, our employees and the vendor community cannot be understated and we hope to continue this trend until the end of the year so as to give the automotive industry ecosystem a strong boost,” said Roslan Abdullah, CEO of Proton Edar.
♦ With the government exempting Sales Tax and car-buyers able to save money, new vehicle purchases have started rising, with July increasing by 29% over the June Total Industry Volume.
♦ The Total Industry Volume (TIV) of 57,552 units comprised 52,119 passenger vehicles, and 5,433 commercial vehicles (including pick-up trucks).
♦ Compared to the same month in 2019, this year’s volume was 13% higher.
♦ However, cumulative sales after 7 months of 232,245 units are 33% lower than for the same period in 2019 which was 347,171 units.
♦ To achieve the MAA’s 470,000-unit forecast for 2020, the industry must sell an average of 47,551 units, or a total of 237,755 units, in the remaining 5 months.
♦ Production also rose as plants shifted into higher gear and compared to the same month in 2019, the total output was only 3% lower. Cumulative production is, however, 36% lower than for the same period last year.
The official numbers are out and as expected, they show a grim picture of the auto industry’s performance in the first 6 months of this year. For the first half (H1) of 2019, the Total Industry Volume (TIV) was almost 300,000 units but this year, it fell by 41.1% to 174,675 units.
As the chart shows, the unprecedented contraction started in March when the Movement Control Order (MCO) was implemented in the middle of the month and the slide continued through April with a 99.7% drop compared to April 2019 as no business could be done. By May, the situation shows signs of improvement that the government was willing to relax the MCO and allowed many businesses to resume operations, with strict Standard Operating Procedures (SOPs) to be observed.
The resumption began with service centres and factories and then showrooms were also allowed to open for business. While large numbers of customers didn’t visit showrooms, many companies began to promote their online services for booking which at least started the purchasing process without having to physically be in contact with the customer.
May saw a climb in numbers to 23,960 units and then came some good news that was part of the government’s plan to help industries recover: the sales tax of 10% would be exempted from June 15 to December 31, 2020. For locally-assembled models, which make up the dominant share of new vehicles sold, the exemption would be 100% and for imported CBU models, it would be 50%. It was hoped that the lowering of prices would encourage people to buy new vehicles.
Like passenger vehicle sales, commercial vehicle sales also fell this year but pick-ups continued to have the biggest volume.
Even with just two weeks in June when the prices were reduced (although Perodua started adjusting prices downwards a bit earlier), sales shot up by 91.7% from the May TIV to 44,695 units – even higher than the 42,526 units reported in June 2019.
2020 forecast revised twice
When the MCO was in force and its impact on the industry was clear, the MAA revised its forecast for the year downwards to 400,000 units. Then, when the government announced the exemption of sales tax, the forecast was revised again as it was felt that the auto industry-specific incentive, along with other economic incentives, would help to boost sales. The revision saw the TIV for 2020 going up to 470,000 units.
This means that, for the second half of the year, the TIV would have to be 295,325 units or almost 50,000 units each month. That may appear a bit ambitious but last year, 5 of the six months in the second half of the year saw volumes over 50,000 units. However, consumers were uncertain about the economy then, not their lives; it is different this year with concerns about COVID-19. Many people have lost their jobs (the unemployment rate increased to 5.3% in May from 3.3% in February) or had big pay cuts and buying a new vehicle might be one of the last things on their mind.
Used car business booming
The used car industry is experiencing a boom, though. According to MAA President, Datuk Aishah Ahmad, apart from wanting to spend less on a vehicle purchase (or not at all), many people may be reluctant to use public transport to avoid risks of infection and therefore buy a low-priced used car for their transport needs.
Obviously, the auto industry would like more assistance from the government to help in its recovery but understandably, the government has to help other industries as well. The new National Automotive Policy (NAP) which was announced at the beginning of the year has yet to be implemented and the MAA will soon be meeting MITI to get more clarification on the policy as well as to offer suggestions on how the industry can be helped in its recovery. The MAA President thinks that the policy is unlikely to be changed despite the challenging economic conditions.
Other ASEAN markets
As always, the MAA press conference also included an overview of how other ASEAN markets are doing and as would be expected, there was a big drop in the total regional sales and production volumes by 42% and 39%, respectively. Only Myanmar did not have a decline in sales (in fact, its sales increased by 5%) during the first 6 months of 2020 but that market is small – less than 8,000 units over a 5-month period. Compared to the 5-month period in 2019, production in Thailand and Indonesia, the two big markets which also export substantial numbers of vehicles, dropped by 40% and 33%, respectively, while Malaysian production was 51% down.
After 2020
The MAA’s forecast for the next few years is conservative and as the TIV for 2020 is going to be lower than normal – the last time it was around 470,000 units was in the early 2000s – 2021 is expected to see a 17% increase to 550,000 units. However, after that, the TIV may slow down and a 9.1% increase to 600,000 units is forecast for 2012. Thereafter, it may be just 2% a year till the end of 2024.
At this time, it’s hard for anyone to say with certainty how things will be. As the International Monetary Fund (IMF) has said, ‘the trajectory of the pandemic remains hard to predict’. Unlike economic recessions where business drops but when things get better, it picks up and continues to grow. This pandemic situation is like a world war, with devastation including loss of lives as well, that impacts virtually everything and with the economies so interconnected, every country will be affected.
♦ Although the Total Industry Volume (TIV) for the month – 40,403 units – was higher (by 1.5%) than the same month in 2019, it was 5.3% or 2,249 units lower than the figure reported for the month of January 2020.
♦ The total sales of new passenger vehicles was 36,702 units (about the same as last year) while commercial vehicles, including pick-up trucks, was 3,701 units (20% higher than February 2019).
♦ The decline in sales was attributed to delays in launches of new models and consumer concerns about the COVID-19 pandemic which showed signs of worsening.
♦ The Malaysian Automotive Association, which has been compiling data since the 1960, expects that March sales will be lower as the Movement Control Order came into effect around the middle of the month.
♦ Production of new vehicles dipped 11.1% after the upswing in January. As demand could be seen to be slowing down, many companies would have cut output to avoid building up too many stocks.
♦ The total output of 40,371 units during February 2020 was 17% lower than that of the same month in 2019.
Source: Monthly reports of Malaysian Automotive Association (MAA)
KEY POINTS:
♦ The Total Industry Volume (TIV) for the month declined by 22% or 12,219 units month-on-month compared to the TIV for December 2019.
♦ The decline in sales was attributed to the short sales month with the Chinese New Year festive season holidays.
♦ Historically, January sales are also lower than December as the last month of the year sees a big push by companies to move stocks and end the year with a high number.
♦ Looking ahead, the MAA feels that February 2020 sales will show improvement since the uncertainties have been resolved.
♦ As always, there are new models to come which will bring customers to the showrooms. An early newcomer is the locally-made Proton X70 while the new 10th generation of the Honda Accord will be launched during this quarter. Models like the Perodua Bezza also continue to have a backlog of orders.
Source: Monthly reports of Malaysian Automotive Association (MAA)
New vehicle sales in the month of November declined by 2.4% or 1,286 units, bringing the Total Industry Volume for the month to 52,584 units of passenger and commercial vehicles. By segment, passenger vehicles accounted for 47,754 units (91%) of the month’s TIV with the remainder being commercial vehicles (including pick-up trucks).
Compared to the same month in 2018 when the market was still in a state of ‘fatigue’ after the surge during the 3 months of GST-free sales, it was to be expected that the figures in 2019 would be higher, with 4,302 units more sold in 2019. A larger volume of passenger vehicles (10% compared to 2018) was sold but commercial vehicles were actually 2% lower.
Source: Monthly reports of the Malaysian Automotive Association (MAA)
As for the TIV for the year to date, ie 11 months, the cumulative volume has reached almost the same level. From January to November, the TIV was 549,445 units which was just 965 units less than for the same period in 2018.
The output of locally-produced vehicles was lower than in November 2018, probably as companies started preparing to scale down stocks with the year coming to an end. 46,517 vehicles were produced, about 8% less than in 2018.
However, the cumulative TIV for 11 months shows that 2019 saw a higher output of 528,333 units where in 2018, the output during the same period was 522,572 units. Passenger vehicles accounted for the boost in numbers but commercial vehicles declined.
A last push to get more sales before 2019 ends.
One month remains and in order to achieve the forecast of 600,000 units for the year by the MAA, 50,555 units would have to be registered in December. This is likely to be possible, with some extra added, as companies will be pushing hard to clear stocks and offer special deals in sales promotions. Many will also be closing their financial year and will want to be able to report the highest numbers to shareholders.
