ASEAN light vehicle sales hit 9-year low in Q1 2020

by Mayank Dhingra 20 May 2020

Toyota sold 231,339 vehicles in the January-March 2020 period, down 18%, in ASEAN markets.

As the world tries to find a way to live with the Coronavirus endemic, countries big or small have borne a huge brunt of the global health crisis, with economies getting crippled to the state of a massive disaster.

The automotive sector, which has been one of the worst impacted businesses owing to its nature of mass-scale production of big-ticket items manufactured involving a highly intertwined global supply chain, is now in a tough spot, the world over.

In a recent report issued by LMC Automotive, the ASEAN5 region which comprises Indonesia, Thailand, Malaysia, Philippines and Vietnam has registered massive decline in light vehicle (LV) sales in the ongoing calendar year 2020.

According to the report, the ASEAN LV market dropped below the Q1 2011 tally of 665,000 units in the first quarter of this year, recording a 19 percent year-on-year decline, albeit slowing down to 9-year low levels by closing at 664,000 units between January and March 2020.

While the major contributor to the de-growth is undoubtedly attributed to the restrictions imposed in most ASEAN countries in response to the Covid-19 outbreak, being particularly severe in Malaysia and Philippines, the economic growth in the region was already undergoing a wave of slowdown with the US-China trade war impacting exports from the region last year, the  report mentions.

With the impact of the pandemic causing businesses and economies taking time to revive, the LMC report has also revised the overall sales projections for the region with FY 2020 (January-December) estimates dropping 11.83 percent to 2.16 million units, compared to 2.45 million units sold in FY 2011.

A country-wise assessment from the report hints that out of all the countries in the region, Thailand and Malaysia have been the worst-hit, with 15.51 percent and 33.12 percent de-growth, respectively, recorded in Q1 2020, over Q1 2011.

The Thailand market saw LV sales closing at 196,000 units in the three-month period this year as compared to 232,000 units sold between January and March 2011. The country saw its biggest automotive extravaganza, the Bangkok Motor Show getting postponed due to the coronavirus outbreak, which is still hanging in uncertainty.

In Malaysia, however, Q1 demand was dragged down to 105,000 units (Q1 2011: 157,000) by a 61 percent drop in the month of March alone, which saw government implementing a Movement Control Order (MCO) from the middle of the month, with all vehicle sales prohibited by  being classified as non-essential.

While the country is now moving towards resumption of operations with the latest Conditional Movement Order (CMO) being imposed, restrictions on utilising full manufacturing capacity at automotive plants remain in place until June 9.

Thailand, Malaysia & Indonesia see their sales forecasts slashed by over 30%
The LMC report has revised FY 2020 outlooks for both Thailand and Malaysia as a response to the loss of business over the last several weeks. While Thailand is now pegged to see LV sales in the range of 690,000 units, a 30 percent year-on-year drop, it also correlates into being an 11 percent drop from the retail of 774,000 units sold in FY 2011.

The country is also set to face a broad-based challenge of tumbling GDP growth, which is pegged at minus 5.3 percent for FY 2020, representing the biggest fall since the Asian Financial Crisis of 1998. Thailand’s GDP growth in 2019 stood at 3 percent – the worst in the last seven years among the ASEAN5 nations.

Malaysia, on the other hand has been sharply dropped by 34 percent to 394,000 units over the FY2011 retail numbers of 596,000 units in the country.

The automotive intelligence firm has also extended similar projections to the remaining markets of Indonesia, Philippines and Vietnam as well. The report suggests that even as Q1 2020 sales in Indonesia grew 11.55 percent to 222,000 units (Q1 2011: 197,000), the pandemic-triggered lock-down is going to have a substantial impact on the economy, furthered by the plunge in global crude prices.

According to LMC Automotive, the Indonesian market is set to experience a 39 percent YoY contraction in its automotive market, with overall numbers anticipated to touch 558,000 units by end-December, a 30 percent drop over FY 2011 retail LV sales of 795,000 units. Philippines and Vietnam are the only markets expected to show an uptick in vehicle sales this year, as per the report.

Similar trends are also shaping up in the Asia Pacific region with LMC Automotive recently also downgrading India’s passenger vehicle sales for the current calendar year by a noticeable 47 percent, setting back its avowed target of becoming the No. 4 car market in the world next year.

All charts and data: LMC Automotive


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