Source: Monthly reports of Malaysian Automotive Association.
Historically, February is a ‘low’ month as it has the least working days of the year and often, there are also major festive periods during the month, further reducing the number of selling days. However, February in 2022 bucks the trend and saw an 8% increase over January sales to close at 43,722 units. Compared to 2021, the Total Industry Volume (TIV) was quite close, with a difference of 274 units.
The surge in sales (or more correctly deliveries) was due to the big backlog of orders being fulfilled as much as possible. The severe floods in December had caused shortages in the supply chain as some parts suppliers had to suspend operations due to their factories being flooded. This resulted in the TIV for January being lower than it should have been and as supplies resumed, the plants quickly rushed to complete vehicles, and send them to dealers.
The resumption of regular production was reflected in the high output of vehicles from plant in February – 51,291 units, which was 13% more than for the same month in 2021. 92% of the output was passenger vehicles. There are still constraints to production due to the global shortage of microchips and the backlog continues as it is beyond control of assemblers and suppliers.
The upward trend is expected to continue through March which has more working days. The companies still have many outstanding orders to fulfill, while new models are being launched every month. March is also the final month of the financial year for some companies, so they will be pushing hard to finish off with their best possible numbers.
As for cumulative TIV, this year looks like it will be a better year if the performance – in spite of shortages – is any indicator. Within just the first two months, the TIV for sales is 10% higher than the same period in 2021, while the TIV for production is 11% higher. Sales of commercial vehicles (including pick-up trucks) is 33% higher, suggesting that companies are confident enough to expand or update their fleets in anticipation of improving business.
Although 2021 was the second year of the COVID-19 pandemic and the auto industry had been hoping to recover from the impact of the lockdown in 2020, the total number of new vehicles sold was actually lower. Where the Total Industry Volume (TIV) in 2020 was 529,514 units, the TIV for 2021 was 4% lower at 508,911 units.
Nevertheless, the usual final-month push by car companies saw the December having the highest sales volume of the year with 65,184 vehicles delivered nationwide. This contributed to the year’s TIV going past the 500,000-unit level that had been forecast by the Malaysian Automotive Association. While 2021, like 2020, had long periods when business activities – including motor vehicle sales and production – were suspended, the rate of recovery in 2021 was not as quick as the year before.
New vehicle sales in Malaysia from 2017 to 2021.
Commenting on the sales figures, MAA President Datuk Aishah Ahmad said that the measures taken by the government were important factors. “The much smaller TIV’s contraction recorded in 2021 [compared to 2020] can be attributed to the measures and wisdom of our government in balancing between saving lives and jobs so as not to jeopardize the domestic economy,” she said.
Owing to the relaxation of the movement control orders, many economic sectors were allowed to re-open for businesses. This helped to improve business confidence which contributed to more sales of new vehicles, including commercial vehicles which are much needed for the running of businesses. Having deferred purchases during 2020, many companies would have made their fleet purchases during 2021 to support their business activities.
The sales exemption has helped to encourage many to buy new vehicles, contributing to the recovery of the industry.
“The extension of the sales tax exemption incentive under PEMERKASA+ package till December 31, 2021, also helped to sustain the demand for new passenger vehicles,” added Datuk Aishah. “Under the PEMERKASA+ package, the government agreed to exempt sales tax up to 100% for completely knocked down (CKD) passenger vehicles assembled in Malaysia, and 50% on passenger vehicles that were imported in completely built-up (CBU) form.
In the passenger vehicle segment, it was evident that even more buyers preferred SUVs, mirroring the global trend which has had manufacturers hurriedly launching new SUV models. In the case of Malaysia, passenger car sales declined by about 19.7% while SUVs grew by 43%. The other segments – MPVs (which used to be second to passenger cars) and window vans – also saw lower sales although not significantly different from their 2020 volumes.
Overall, passenger vehicle sales fell by 5.9% to 452,663 units but this was not entirely due to reduced demand. Some companies also experienced stock shortages due to the semiconductor microchip supply issues which affected their local production or production at overseas factories from which they import their vehicles. It only takes one part being unavailable to prevent a vehicle from being completed and leaving the factory.
The commercial vehicle segment (which includes pick-up trucks)) fared better, recording an increase of 15.9% to a volume of 56,248 units, which represented 11% of the TIV. In this segment, pick-up trucks registered the biggest increase of 20.9% to 40,736 units, account for 72% of the commercial vehicle segment.
All-new 4th generation Isuzu D-MAX launched in April would have contributed to growth in pick-up sales.
The growth would have been helped by the introduction of new models like the Isuzu D-MAX during the year. The all-new generation of the popular pick-up truck was launched in April and Isuzu Malaysia reported that average monthly orders were 100% higher than the previous generation.
The bigger commercial vehicles saw lower sales; bus sales, for example, fell by almost 50% between 2020 and 2021 although this would be understandable in view of the situation. With restrictions on interstate travel for much of last year and borders with Thailand and Singapore pretty much closed, tour companies would not have wanted to get new vehicles. However, truck sales did go up by 5.3%, probably in view of increasing demand for delivery services.
Although the factories were forced to shut down for an extended period, the drop in local production was actually minimal – 3,535 units or 0.7%, compared to 15% in 2020 when the drop from 2019 was almost 87,000 units. While passenger vehicle production declined by 11,324 units (2.5%), commercial vehicle production actually rose by 7,789 units (28.4%). Outputs rose for trucks and panel vans which, as mentioned earlier, had greater demand.
Looking ahead in 2022
Notwithstanding pandemic-related issues that can cause disruptions and supply chain issues such the global shortage of semiconductor chips, rising cost of freight, there are still some positive aspects that can boost new vehicle sales in 2022.
Continuation of the sales tax exemption for imported and locally assembled passenger vehicles till June 30, 2022 will be helpful in encouraging people to buy new vehicles. Bank Negara Malaysia’s decision at its Monetary Policy Committee (MPC) meeting in November 2021 to maintain the benchmark Overnight Policy Rate at 1.75% will provide additional policy stimulus to accelerate the pace of economic recovery. This may help to stimulate domestic spending including for high-cost items like motor vehicles, and with the economic recovery will come more consumer spending.
Therefore, the MAA is optimistic that the industry will accelerate its recovery in 2022 and is forecasting growth of 17.9% over the 2021 TIV. This would take the volume to the elusive 600,000 units that has been difficult to reach (the last time was in 2019 when the TIV was 604,281 units). The MAA expects the passenger car segment to grow by 19.3% and account for 540,000 units, with the commercial vehicle segment (which includes pick-up trucks) growing by 6.7% to 60,000 units.
Looking further ahead, the MAA expects 2023 to be a boom year as recovery continues with rising demand after 2022. It forecasts a 7.5% increase to 645,000 units then but then the market will slow down again with average growth of around 2% annually up to 2026. Of course, much depends on how the pandemic runs its course although the government has made it clear that there will not be lockdowns again (apart from targeted ones, if really necessary).
All data from monthly reports of Malaysian Automotive Association.
The Total Industry Volume (TIV) for November was 58,742 units, a drop of 7.5% from October and 4% less than what was recorded in November 2020.
This decrease was attributed to reduced supplies of certain models due to the global shortage of microchips (as well as some parts), and some members of the Malaysian Automotive Association (MAA) also believe that customers may have deferred plans to purchase their new vehicles after learning that the sales tax exemption would be extended till June 30, 2022.
Although there are production delays at some plants due to shortage of parts, the total output in November of 58,0-79 units was 6% higher than for the same month in 2020.
The cumulative TIV over 11 months reached 441,136 units – 4% below the volume achieved for the same period in 2020. This means that the industry would have to deliver 58,864 vehicles in December to hit the forecast of 500,000 units. While the MAA is optimistic that there will be a higher TIV in December, it is hard to predict just how much higher due to the supply issue. Typically, there is a significant jump at the end of the year with promotions and a final push by companies to get the best numbers before they close the year’s books. In 2020, the TIV went from 56,489 units in November to 64,836 units.
Data sources: Monthly reports of the Malaysian Automotive Association.
With more days in September and continued progress towards normalising activities in the business sector, new vehicle sales continued to rise. Although 4.8% lower than October 2020, the Total Industry Volume (TIV) of new vehicles registered in the month was 43% higher than September.
It’s uncertain how much of the increase was from new orders as the more popular models from the two leading Malaysia carmakers – Perodua and Proton – have a backlog. Production has been interrupted due to the global microchip shortage which worsens the situation of delayed deliveries which was already evident before the long period of lockdown.
Cumulatively, after 10 months, the TIV has not reached the same level as the 10-month period in 2020 and the 2021 TIV is 382,379 units or 5% lower than the same period in 2020.
The plants have been working flat out to raise output but there is also a dependence on their suppliers, some of whom have their own production issues and disruptions. For this reason, Perodua has ensured that the ‘ecosystem’ remains as intact as possible by helping its suppliers in various ways so that they do not have to shut down.
Compared to the same month in 2020, total output in October 2021 was 12% higher with 61,248 passenger vehicles (excluding pick-up trucks) and 4,162 commercial vehicles assembled.
From January to October 2021, the total number of vehicles produced was 369,406 units, about 5,000 units less than the same period in 2020.
The Malaysian Automotive Association (MAA) expects that the TIV has reached a plateau and November numbers will be similar. There may, however, be disruption to supply of imported vehicles as the plants in other countries may be hampered by the microchip shortage. Generally, companies like Perodua expect to be able to maintain production levels until the end of the year as they have a commitment from their suppliers but are undertain of the situation in 2022.
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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.
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.
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.
With continued high demand, Proton reports that its total sales volume increased again for the month of April, the third consecutive month of growth. 15,017 units (including exports) were delivered, and the company’s cumulative volume after the first 4 months of 2021 reached 47,843 units. This is more than double the number for the same period last year although it has to be remembered that the MCO (Movement Control Order) shut down business activities for the whole industry for a while.
By its own estimate, Proton’s latest figure means it has a market share of 26.7% for April, and it continues to strengthen its hold in second position in overall the sales rankings table with a market share to date estimated at 24.4%.
Proton Saga at the top
The company believes its Saga is at the top of the national sales chart with 5,472 units sold in April while its two SUV models continue to set strong sales numbers. The X50, which has a long waiting list, set yet another new high for deliveries with 3,583 customers receiving their vehicles in April. The X70 was dominant in the C-segment SUV category with 2,101 units delivered.
Proton’s other 3 models also performed well and had their best months of 2021. Despite strong competition in the B-segment sedan market, 2,266 units of the Persona were sold, while the Exora continued to rule the C-segment MPV class. Iriz sales received a boost from strong demand for the R3 Limited Edition model that allowed it to have its best sales month since 2019.
Iriz R3 Limited Edition
Good month for the industry
“April was a good month for the automotive industry and aside from Proton, several other brands also had their best month of the year so far. The Total Industry Volume is estimated to be over 56,000 units as all brands are trying to fulfil sales orders before the expiry of the PENJANA sales tax exemption at the end of June 2021,” said Roslan Abdullah, CEO of Proton Edar, the company’s sales arm.
“For Proton, we are continuing with efforts to meet the strong demand for our products while maintaining a high level of product quality. At the same time, we are focussing on improving customer service and addressing issues related to spare parts availability, which is vital as our sales volume increases. We expect the situation will see significant improvement as the year progresses but we are working hard to move up that timeline,” he said.
He added that Proton Edar is looking forward to increased production volumes with the new stamping plant, which is now under construction. “The benefits of improved production volumes, lower costs and increased quality will allow us to increase sales exponentially both domestically and abroad, which will drive the company towards achieving its stated long-term goals,” he said.
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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.
