Pegasus Business and Market Advisory - Market for Motor Vehicles in Southeast Asia

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Pegasus Business and Market Advisory is an independent firm offering services in business consulting and market research on Asia-Pacific.

23 June, 2006

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Business and Market Snapshots - Southeast Asia

Market for Motor Vehicles in Southeast Asia - Indonesia, Malaysia, Philippines, Singapore and Thailand, May 2005

Total sales of motor vehicles in 5 selected markets of the Association of Southeast Asian Nations (ASEAN) countries, namely Indonesia, Malaysia, Philippines, Singapore and Thailand have collectively been on an increasing trend. Motor vehicles refer to household passenger cars as well as vehicles for commercial use but exclude motorcycles. Total sales of motor vehicles in these markets increased from 1,066,551 units in 2000 to 1,797,963 units in 2004.

Indonesia. Indonesia is currently experiencing strong growth in its motor vehicles market. Research shows that sales grew by 36.2% in 2004 reaching 483,000 units. Research also shows that annual sales of motor vehicles in the Indonesian market could reach 530,000 units in 2005 and as high as 1.3 million by 2010. This would be possible if local car assemblers continue to introduce new low-priced models into the market and banks in Indonesia continue to provide consumer credit with the relative ease at which they are currently providing. Up to 2003, commercial vehicles accounted for most of the motor vehicles sold in the Indonesian market, but in 2004 household passenger cars made up the bulk of unit sales accounting for 64.8%.

Malaysia. Motor vehicle sales in the Malaysian market slowed by 6.9% in 2003 but grew again by 20.4% in 2004. This was due to low lending rates offered by Malaysian banks and favourable consumer credit terms experienced during that year. Malaysian motor vehicle sales for 2005 are expected to show a more modest growth of about 2.5%. Malaysia's national car manufacturer, Proton, would face strong competition in local market from Japanese and Korean brands as they introduce low-price models in 2005. Passenger cars have consistently made up the bulk of motor vehicles sold in the Malaysian market since 2000, making up 80.4% of the total motor vehicle sales in 2004. Malaysia was also the largest passenger car market in Southeast Asia during the period.

Philippines. The Philippines represent the smallest market for motor vehicles among the 5 selected markets in Southeast Asia. Apart from 2002 (when the Philippines recorded a 9.8% growth in sales of motor vehicles), the market in the Philippines is smaller than Singapore which has only 5% of the Philippines' population. Additionally commercial vehicles have made up most of the motor vehicle sales in Philippines' market since 1998 and accounted for 62.2% of the total sales in 2004.

Singapore. Singapore’s population is 20 times smaller than the Philippines but, with the exception of 2002, motor vehicles sales in Singapore’s market have generally been higher than the Philippines. Main reason is the higher income levels in Singapore whose GDP per capita is on par with many economically advanced economies in the European Union. Motor vehicles sold in Singapore's market have been over the years mostly household passenger cars and in 2004 made up 85.5% of the total units sold. Singaporean households often drive their cars across the border to neighbouring Malaysia during weekends, school holidays and public holidays celebrated by both countries such as Aidil Fitri, Chinese New Year, Christmas, Deepavali and New Year.

Thailand. Since 2003, Thailand has been the largest market for motor vehicles in Southeast Asia. Unit sales grew by 17.4% and exceeded 600,000 units in 2004. Commercial vehicles make up the majority of vehicle sales in Thailand's market over the past decade and accounted for 66.6% of the motor vehicles sold in 2004. Sales are expected to continue to grow at a slower rate in the near future, but the market is expected to reach 725,000 units by 2006. Slower growth is due to increasing oil prices affecting various sectors of the economy including the market for car models with high fuel consumption.

Pegasus Business and Market Advisory (PBMA) provides business and marketing research and advisory services focussing on Southeast Asia namely Malaysia, Singapore, Thailand, Indonesia, Philippines, Vietnam and Brunei. Contact corporate@pegasus-asia.com for further information.