♦ 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.
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)
♦ The Total Industry Volume (TIV) in 2019 was 604,287 units, the first time that the volume of sales crossed the 600,000 level since 2015. The achievement was helped by a boost in December with total sales of 54,842 units, the second highest monthly volume in 2019.
♦ While sales of passenger vehicles rose by 3.2% compared to the year before, the opposite was the case for the commercial vehicle segment (which includes pick-up trucks) as it saw a decline of 17.4%. The uncertainty of the fate of major projects in the first half of the year as well as a general slowdown of the economy had companies holding back on capital expenditures.
♦ Sales of 4WDs and SUVs grew noticeably (8.4%) at the expense of passenger car and MPV segments, the former contracting by 3.9% and the latter by 4.5%. Nevertheless, passenger cars (sedans and hatchbacks) still accounted for the largest share of passenger vehicle sales (69.4%), while 4WDs/SUVs had a 22.6% share.
♦ Sales of pick-ups, once a popular segment, fell significantly from 44,443 units in 2018 to 35,121 units in 2019, a reduction of 21%. Nevertheless, these vehicles – which are used for personal transport as well as for business purposes – accounted for almost 65% of commercial vehicle sales.
♦ Local production of vehicles totaled 571,632 units in 2019, a modest 1.2% increase over the output in 2018. While more passenger vehicles were produced (+2.6%), the plants cut back on production of commercial vehicles by 15.6% in the light of uncertain demand.
From 2020 to 2024
♦ Looking ahead, the Malaysian Automotive Association (MAA) does not expect the market to grow substantially in 2020 and has forecast a TIV of 607,000 units, just 0.5% more than the 2019 figure. As in the past, this will be reviewed after the first 6 months of sales.
♦ Looking further ahead for the period from 2021 to 2024, the MAA sees the market improving a bit and forecasts annual TIV growth of 2% to 2.3%, reaching 660,920 units by the end of 2024. With sales in Indonesia and Thailand currently around 300,000 units greater, Malaysia will remain at No.3 position in ASEAN.
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.
New vehicle sales for October – the first month of the final quarter of 2019 – began on a high note with a 21% increase over the Total Industry Volume (TIV) in September to 53,870 units. This volume was also 14% higher than for the same month in 2018 although a comparison may not be right since it was after the GST-free period when sales had seen a huge boost and the market slowed down in the first few months after that.
The Malaysian Automotive Association (MAA) attributed the increased TIV to more selling days as well as more working days. When there are many holidays, there is also disruption in processes such as registration and loan approvals, delaying completion and affecting deliveries.
Source: Monthly reports of Malaysian Automotive Association
By segment, passenger vehicles (excluding pick-up trucks for personal use) accounted for 93% of the TIV in October, a 16% increase over the same month in 2018. However, commercial vehicle sales were virtually unchanged with 4,883 units (including pick-up trucks) delivered.
The cumulative TIV after 10 months of this year reached 496,861 units which was 5,267 units lower than for the same period in 2018. The higher TIV last year was due to the 3-month GST-free period which saw an above-average surge in monthly sales as buyers could enjoy significant savings (especially for the more expensive models).
Production
The assembly plants collectively produced 55,775 vehicles in October, compared to 51,789 vehicles in the same month in 2018. The increase was largely in the passenger vehicle segment while the commercial vehicle segment declined.
Cumulative production for 10 months was 481,816 units which was 97% of the cumulative sales volume but this direct comparison may not be entirely accurate as there would be an overlap in stocks and imports. Popular models may leave the plants within days of being completed but there may also be vehicles which don’t move out so fast (although the plants would not want them around too long either as they take up parking space).
With two months left to the year and a forecast of 600,000 units for the year by the MAA, it means that sales in November and December must average 51,569 units. This year, 5 months have seen the TIV above 50,000 units and it’s often the case that there is such a big boost in December that the forecast is met.
News from Proton has been good all year long, with upbeat press releases arriving at our mailboxes every month. And as the end of the year approaches, the carmaker reports that its cumulative sales volume (including export deliveries) is almost at 80,000 units (79,833 to be exact) after 10 months. This represents a growth rate of 46% in a market where the Total Industry Volume (TIV) has decreased by 1.3% to date.
Pending official industry data from the Malaysian Automotive Association (MAA), Proton estimates its market share to be 16%, which is 5.2% higher than the previous year. It has strengthened its hold on second place in the overall sales chart and is confident of maintaining this position to the end of 2019.
While sales of the X70 SUV have contributed to Proton’s upswing – over 24,000 units have been delivered so far – the Saga has also drawn a huge number of customers since being launched in August. Over 28,000 bookings have been received and in October, the new model posted its highest sales figure for over four years. 4,273 units were sold last month and for the first 10 months of the year, the cumulative total is 30,331 units, which is a 26% increase over the previous year.
“We are humbled by the response our products have received from Malaysian car buyers. In the space of just 8 months, we launched our first SUV and updated all our other models, giving Proton the youngest model range for any car brand in Malaysia. The hard work has paid off with increased sales and we are now confident of being able to sell 100,000 units this year, providing us with a solid base to move forward in 2020 and beyond,” said Dr Li Chunrong, Chief Executive Officer of Proton.
Dr. Li said the company is matching the commitment of its dealers by continuing to invest in training programmes for sales and service staff to ensure the level of service delivered matches the premium image the brand aspires to. “As we grow the number of 3S/4S outlets, we can then deliver an improved brand experience to more Malaysian car buyers. Proton will continue to focus on improving customer service levels as we know it is one of the keys to building long-term brand loyalty,” he added.
