Malaysia Autos Report Q1 2010 - new report released

Malaysia´s automotive industry is showing signs of improvement, albeit relatively speaking, and this has prompted a revision of the report’s sales forecast. New vehicle sales for H109 as a whole totalled 251,092 units, down from 277,973 in the same period of 2008; a drop of 9.7% y-o-y. Against this backdrop, the Malaysian Automobile Association revised its expectations for 2009 as
a whole to a drop in new vehicle sales of 8.8% y-o-y, with an economic recovery expected to kick in during Q409. Sales for September were down 9.2% y-o-y, taking sales for the nine-month period ending September down 7.5% y-o-y to 397,619 vehicles. This has prompted BMI to raise its forecast for 2009, as sales for October were expected to be on a par, with a possible uptick to end the year.

The future of the industry has also come under the spotlight as the government released its new National Automotive Policy in October. The plan will focus on improving the sustainability of the domestic industry, while also making more provisions for the inclusion of international brands. Incentives will be provided to develop the national parts segment, with a view to phasing out component imports, while the system of obtaining Approved Permits (APs) for imports will be axed by 2015. The NAP includes 18 new policies and measures in total, which will be implemented from January 1 2010. One of the major points is an attempt to streamline the domestic industry to two national high-volume carmakers, in order to cut back on overcapacity and rationalise product ranges.

Greater liberalisation of the industry could go some way to improving Malaysia´s position in BMI´s Business Environment Ratings, where it currently lies in ninth position with a rating of 52.6 out of a possible 100. While the country is a leading light of the ASEAN trade bloc, which has made it a popular choice for regional production activities in the auto sector, there is the potential for greater things if a proposed free trade agreement with the US is finalised. In terms of the market itself, production growth potential receives an average rating, while potential sales growth is low in comparison with its peers.

Until the NAP comes into force, Perodua and Proton continue to dominate the market with a combined market share of 61%. Proton still lags behind its domestic rival and will be looking to benefit from provisions in the plan for encouraging co-operation with international brands. Proton has been looking for a strategic partner for a number of years and it was reported in November that Volkswagen may look to forge closer ties with the national firm. Toyota is still the country´s largest foreign brand, but some way behind Proton with 15.3% of the market, compared with Proton´s 28.9%.