Malaysian Automotive Market (2020) and Covid-19

In January 2020, Frost & Sullivan forecasted Malaysia’s vehicle sales to reach approximately 608,790 units for 2020, a growth of 1 per cent. The view was with consumer confidence and new model launches, growth is likely for the market.

In 2019, growth for vehicle demand was 1% with strong performance of new model launches especially in the SUV segment – X70. Malaysians seem to switch from MPVs to SUVs in 2019. The top three players dominate the market (77.7%) – Perodua (44.3%); Proton (18%) and Honda (15.4%). The biggest gain in market share was by Proton.

Malaysia launched its refreshed National Automotive Policy (appropriately titled “NAP”) in February 2020. The focus is on Next Generation Vehicle (NxGV), Mobility-as-a-Service (Maas) and Industry Revolution (IR 4.0). Through the years, the industry’s performance often fell short of policy targets. In 2014, the target set for 2020 was production of over one million units and a contribution of 10% to GDP. This is unlikely now. The new target for 2030 is 1.47 million vehicles annually by 2030 with RM104.2 billion as contribution to Malaysia’s GDP. If GDP is RM3.4 trillion then, it is just around 3%.

Source: The Edge Malaysia

Going forward, what does the virus mean for the automotive industry?

Some think it is business as usual. Others view the pandemic as a serious disruption of the business. Affin Hwang Capital expects total industry volume to plunge by 20% to 485,000 units. MIDF Research only sees a 3.8% contraction while Kenaga Research sees a decline of 6.75%. In the 1992 Asian Financial Crisis, banks rejected 80% of hire purchase proposals and sales dropped by 60%. There is some hope that the market may recover in the 4^th quarter of this year.

But this market disruption period is for the Government to withdraw subsidies, grants, tax breaks and the like. Also, Malaysia needs to focus on the electric vehicle (EV) segment and allow for tariff free imports of electric and fuel cell vehicles. That is better than choosing a Third National Car (whatever that means). Otherwise, we will be doing the same old thing over and over and expecting a different outcome.

Reference:

1.     Frost & Sullivan expects the Malaysian Automotive Market to reach 608,790 units in 2020, Melissa Tan, Jan 14, 2020

2.     NAP 2020 – taking Malaysia’s automotive sector to the next level by Kamarul Azhar, The Edge Malaysia, March 2, 2020

3.     Covid-19 and its impact on the auto industry by Yamin Vong, Focus Malaysia, March 23, 2020

4.  Total vehicle sales to fall, Starbiz, Friday 3 April 2020.