MALAYSIA: Malaysian total vehicle sales for 2023 is forecasted to rise by 3.8%, according to BMI, Fitch Solutions’ unit.
The total vehicle sales revision was made, in contrast to the research house previous forecast of a 9% decline, due to much better than anticipated pent-up demand for vehicles purchased during the sales tax exemption period.
“We note that we had previously expected demand to taper off in the second quarter of 2023 (Q2’23), however, data compiled by the Malaysian Automotive Association (MAA) shows that demand remained elevated all throughout the first half of 2023 (H1’23).
“According to the MAA, vehicle sales rose by 12.6% year-on-year (y-o-y) in the first seven months of 2023 to reach 429,807 units from 381,680 units over the same period in 2022.
“Easing supply chain constraints have given a boost to Malaysia’s total vehicle sales as fulfilled bookings reveal the true extent of pent-up demand,” it said.
For instance, Perodua, Malaysia’s best-selling automaker revealed a 17% rise in output levels in H1’23 owing to a better supply of parts and improved production efficiency levels.
The automaker also revealed that it is on track to meet its guidance of 314,000 units to be registered in 2023.
Similarly, the second-highest automaker by volumes in Malaysia, Proton, revealed that demand remains robust post the sales tax exemption expiry.
Proton has highlighted elevated demand for its SUV lineup with the X90 model taking the lead in the D-segment.
Overall, the research arm highlights that national car brands remain popular with market share firmly entrenched.
Expect a surge in demand for electric vehicles (EVs)
Demand for EVs will surpass internal combustion engine (ICE) cars within the research house 2023 to 2032 forecast period.
“We forecast total EV sales to quadruple in 2023, although the country’s EV penetration rate (EV sales as % of total vehicle sales) will sit at just 1.8%.
“Although the growth rate for the Malaysian EV market is significant, we note that it falls behind that of 2022 (+870.8%).
“The slowdown in growth terms is reasonable since growth rates tend to recede as volumes rise,” it said.
Looking at the key drivers for Malaysia’s prospective growth in EV adoption rates, it highlights the extension of import duty exemptions for components for the local assembly of EVs, the excise duty and sales tax exemptions for locally assembled completely knocked down (CKD) EVs, and the import and excise duty exemptions on imported completely built-up (CBU) units.
“Another important consideration made in our EV forecast is the presence of local EV manufacturing from Volvo and Mercedes-Benz.
“The latter has indicated that it plans to have 30% of all its vehicles sold in Malaysia to be electrified by 2030, as Malaysia offers one of the highest EV penetration rates for its products globally.
“Indeed, Malaysia has also witnessed a large number of automakers entering the market giving consumers more choices.
“For instance, BYD, the vertically-integrated Mainland Chinese EV automaker (largest EV maker in the world) has entered the Malaysian market offering affordable EV options such as the Dolphin model and the popular SUV Atto 3 model,” it said.
In addition, commercial EVs are also picking up steam with the announced entrance of Volvo commercial heavy trucks.
With road freight a dominant mode of transporting goods in the country, electric heavy trucks will be in focus especially as companies look to scrutinize their supply chains for emissions reductions.
“We remain cautious on Malaysia’s vehicle market in 2024 and 2025, as high base effects could derail the record sales volumes posted in 2022 and expected in 2023. This could lead to a weaker sales environment beginning in 2024 as high base effects kick in.
“We have therefore revised our 2024 and 2025 forecasts lower in light of the upward revision in 2023 vehicle sales.
“We have previously expected sales in 2024 and 2025 to rise by 3.3% and 3.0%, respectively, and now, we expect sales to grow by a modest 1% in 2024, but to contract by 0.5% in 2025 as the local autos market faces some difficulty and somewhat slows down.
“That said, we believe that vehicle demand will remain at elevated levels as Malaysian consumers benefit from structurally high economic growth levels, a dynamic economy that is attracting investments in high-tech sectors such as the semiconductor manufacturing space, and generally high-income levels as Malaysia inches closer to high-income status,” it said.