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
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.
Perodua delivered a total of 23,203 vehicles last month, which was the best sales month in 2020 for the Malaysian carmaker, beating the June volume by 9.2%. This brings the cumulative volume for the first 7 months to 97,373 units. For the same period in 2019, it was over 141,000 units, which shows the impact that the Movement Control Order (MCO) had on new vehicle sales this year.
Three bestsellers of 2020
The carmaker estimates its July and year-to-date market shares to stand at 40% and 42%, respectively. The models contributing to this were the Myvi, Axia and Bezza which, according to Perodua, are Malaysia’s top three best-selling vehicles in the first seven months of 2020.
Cumulative sales of the Myvi were 29,313 units, while the Axia reached 28,107 units, and the Bezza ended July at 25,416 units.
“The Perodua Myvi, Malaysia’s best-selling vehicle every year since 2006, has recently been upgraded with the latest Advanced Safety Assist (ASA) 2.0 suite of driver assistance safety systems. It remains one of the most affordable cars with advanced safety features in the country,” said Perodua’s President & CEO, Dato’ Zainal Abidin Ahmad.
Higher sales will help automotive eco-system
“Since our operations restarted after the 2-month Movement Control Order (MCO) closure, sales volumes have rebounded swiftly, aided by the government’s sales tax exemption which will run until the end of the year. Should this encouraging trend continue, the healthy volume will enable us to further bolster Malaysia’s automotive eco-system of suppliers and dealers in this time of need,” he said.
According to Malaysia Automotive, Robotics and IoT Institute (MARii) estimates, a Total Industry Volume of at least 500,000 units is needed this year to ensure the continued survival of the automotive eco-system. The Malaysian Automotive Association (MAA) has offered a forecast of 470,000 units of new vehicle sales after obtaining input from its members.
“Amidst the COVID-19 crisis, we understand that we must work to our fullest capacity to help shore up the Malaysian economy and ensure jobs are protected. As the market leader, Perodua’s utmost priority is to continue providing the best products and services to ensure maximum customer satisfaction. We are committed to continue offering better value propositions to all Malaysians in the forms of affordability, quality, technology and the latest advanced features,” said Dato’ Zainal.
All of Perodua’s current models have over 90% local content and with its economies of scale, service parts are affordable and readily available, giving its valued customers total peace of mind. Dato’ Zainal added that Perodua embodies the concept of ‘Simple, Slim and Compact’ in all its operations, including interactions with all its stakeholders, while never forgetting its People First focus.
2020 will be remembered as a very bad year for the auto industry in Malaysia and other countries. The COVID-19 pandemic stopped sales (and production) leading to unprecedented contraction of markets by nearly 100%. When business was allowed to resume, consumers remained still worried about uncertainties of the future, leading to more cautious spending/
This of course doesn’t help the economy to recover so the government has had to allocate billions for aid to various sectors to provide incentives to consumers and encourage them to start buying. For the auto industry, the assistance is in the form of exemption of sales tax, which will be given till the end of the year.
The incentive seems to work as most companies have reported high sales numbers, although the Malaysian Automotive Association (MAA) expects that when the year ends, the Total Industry Volume (TIV) will be around 470,000 units – 22.2% or 134,287 units lower than the TIV in 2019.
Among the companies experiencing healthy sales numbers is Proton which reports that its total sales volume in July was its highest since June 2012. Compared to June 2020, the increase was 37.2% while compared to July 2019, it was 45.7%. And with 13,216 units delivered, the carmaker estimates that it should have a market share of 63.2% of the TIV for the month.
Four models are said to have topped their respective segments. The Saga, with 5,421 units (including all 1,100 units of the 35th anniversary edition) sold led in the A-segment. The popular X70 recorded its best month since being launched as 3,087 units of the SUV were delivered to new owners nationwide.
The other two Proton segment leaders were the Persona and Exora, with 3,043 units and 792 units, respectively, sold in July.
“Proton’s performance in July 2020 was our best in over 8 years. We are especially happy with how our models are faring within their segments. We also note that there has been a positive effect on other areas of the business as a result of the encouraging sales. For instance, Proton Commerce, our in-house vehicle financing provider, saw an increase of 100% in the number of loans it disbursed compared to the previous month. Therefore, we are thankful for the support shown by all Malaysians and as for now, we remain cautiously optimistic for 2020,” said Roslan Abdullah, CEO of Proton Edar.
“For August, Proton aims to continue to excite the market and stimulate sales in preparation for more model introductions later in the year. Our production, quality, sales and aftersales divisions are all working hard to ensure we are able to meet consumer demand as well as deliver a level of customer service befitting the brand promise that we have set out,” he added.
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.
Following a recent announcement by the Malaysia Automotive, Robotics and IoT Institute (MARii), Perodua has expressed its support for the government’s initiatives to sustain Malaysia’s automotive industry amidst the ongoing COVID-19 situation.
“Perodua is in full support of the government’s aim to fortify Malaysia’s automotive industry in these trying times, and its various initiatives to achieve that aim,” said Perodua President & CEO, Dato’ Zainal Abidin Ahmad.
“As Malaysia’s biggest carmaker by volume, we are eager and ready to step forward and work with the government to ensure the industry’s continued survival in this difficult time,” he added.
TIV needs to be 500,000 units
According to reports, MARii estimates a 28% drop in new car sales this year due to the Movement Control Order (MCO) brought about by COVID-19. It estimates that a minimum 500,000 units for the Total Industry Volume (TIV) would be needed in 2020 for automotive businesses’ continued survival.
According to the Malaysian Automotive Association (MAA) which compiles monthly sales report, the TIV up till the end of April was 106,601 units. This means that monthly sales for the remaining 8 months would have to be around 49,175 units to reach MARii’s figure.
Based on consultation with its members which are the various importers and distributors, the MAA has already revised its forecast downwards by 33% to 400,000 units from 600,000 units. That’s a TIV level almost similar to what was achieved 19 years ago in 2001
Incentives proposed to stimulate demand
Among the incentives MARii outlined to stimulate demand are a temporary waiver on downpayments, reduced loan interest rates and joint subsidies between carmakers and the government for roadtax and insurance for a limited period.
“It is indeed a challenging time for all of us. However, Perodua is confident that with the government’s collaboration, the industry as well as its ecosystem of suppliers and dealers will be able to weather the storm together,” Dato’ Zainal said.
As reported earlier, Perodua sold delivered 7,886 vehicles in May and a total of 52,920 vehicles during the first five months of 2020. This accounted for a 41% share of the market against an estimated January-May TIV of 129,401 units.
“Perodua is also doing its part to sustain its vast ecosystem of suppliers and dealers. Besides our volume, we assist and support them through investments, purchases and advance purchases, longer credit terms as well as various operational transformation initiatives and development programmes,” Dato’ Zainal added.
♦ 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)
