Slowing Economy - ASEAN’s New Car Sales Hits Four-Year Low

Car sales in the ASEAN trade bloc slowed by eight percent in the first six months of 2015. Worryingly, two of ASEAN’s biggest car markets – Indonesia and Thailand - saw their market contracting by double digits, 18.2 percent and 16.3 percent respectively.

ASEAN’s member countries collectively sold 1,481,977 cars as of June 2015, eight percent less than the same period in 2014.

This year’s six-month performance is the worst performing six-month period since 2011, when Thailand was hit by devastating floods which severely affected the region’s automotive industry in the second half of 2011.

The Association of Indonesia Automotive Industries (GAIKINDO) said June saw sales contracting by 26 percent over the same month last year. It was also the first time in five years and nine months that Indonesia’s monthly new car sales had dropped by more than 25 percent.

The association also indicated that it might have to revise its full-year forecast again, which had already been cut once earlier this year, from 1.2 million vehicles to around 1.1 million vehicles.

GAIKINDO said the weakening of the Rupiah is pushing up prices of imported parts, thus raising prices of finished vehicles. It also added that consumer sentiments is poor and is affecting spending.

Over in Thailand, sales declined by 16.3 percent from 440,911 vehicles last year to just 369,109. Toyota Motor Thailand, which compiles the country’s new vehicle sales data has since revised its full-year forecast for Thailand to ‘800,000 units or less,’ down from the company’s initial forecast of 920,000 units.

If sales doesn’t reach at least 880,000 units by the end of this year, 2015 will be the third consecutive year of decline for Thailand’s domestic car market.

Company President Mr. Kyoichi Tanada has warned that 2015 is quickly becoming the most challenging year for him since he assumed his current position in 2009.

Over in Malaysia, sales declined marginally by 3.3 percent, down from 333,156 units in the same six-month period in 2014 to 322,184. Earlier today, Honda Malaysia announced that it will be revising its full-year forecast for Malaysia's new vehicle sales downwards by 3.9 percent, from 697,000 vehicles to 670,000 vehicles. Weakening Ringgit, implementation of Goods and Services Tax (GST) and petrol price fluctuation were given as the reasons behind the downward revision.

Other smaller emerging markets like Philippines and Vietnam remained strong, growing 20.7 percent and 66.8 percent respectively, but this is largely because of the low base effect for these two countries.

In the first half of 2014, Philippines sold 108,957 vehicles while Vietnam sold 55,030 vehicles.