Sustained economic growth, infrastructure developments, and the carmakers (or ‘OEMS’ – original equipment manufacturers) periodic introduction of models are giving a huge boost to the Association of Southeast Asian Nations (ASEAN) automotive industry. Thailand is expected to experience the highest growth in 2018 on the back of private sector revitalization but Indonesia will retain the top spot due to the impetus from a positive fiscal policy. Overall, vehicle sales in the region are set to cross 3.5 million units in 2018.
“The ASEAN automotive industry benefits significantly from governments’ continued promotion of infrastructure development through investments. There is also ongoing support for energy-efficient vehicle programs,” said Dushyant Sinha, Mobility Senior Director at Frost & Sullivan. “Already, e-hailing has started to impact vehicle sales in some ASEAN countries and is likely to have a larger impact in the medium and long terms.”
Frost & Sullivan’s recent analysis, ASEAN Automotive Outlook, 2018, provides a detailed overview and analysis of the trends in the automotive industry in ASEAN. The study focuses on the three key markets of Malaysia, Indonesia, and Thailand.
While disposable incomes have increased in the region, the industry is still grappling with disruptive trends such as elevated levels of household debt in Thailand and Malaysia. Furthermore, the existence of high fiscal control, deficit and energy prices in Indonesia, growth of alternate mobility solutions in Malaysia, and changes in excise base in Thailand need to be tackled for greater growth.
“Automotive OEMs can offset some of the negative market sentiment and attract new buyers by providing vehicle facelifts with interesting features,” noted Mr. Sinha. “They could also offer promotions and attractive schemes to encourage the purchase of high-value items such as vehicles.”
The ASEAN market will continue to show a preference for entry-level vehicles and crossovers. For long-term success, OEMs need to tap the growth opportunities present in the following areas:
♦ Increased private consumption in Malaysia, Thailand, and Indonesia due to strong economic growth. This has a direct impact on the sales of big-ticket items such as passenger vehicles.
♦ Infrastructure development, which will have an impact on the demand for commercial vehicles (CVs), especially heavy trucks and pick-ups.
♦ Growth in exports, which will influence the market for CVs and pick-ups.
♦ A slew of energy-efficient programs. The Indonesian government has reduced the luxury tax on low-emission cars, while the Malaysian government provides incentives and exemptions to OEMs under the energy-efficient vehicles (EEV) program. Thailand’s eco car program provides tax exemptions and incentives to eco cars manufactured/assembled in the country.