ASEAN New Car Sales Reach 3.33 Million in 2017
Two-thirds the scale of the Japanese market
Two-thirds the scale of the Japanese market
JIJI Research Institute
In tandem with rising national incomes, ASEAN's car market is also expanding. New car sales in ASEAN in 2017 stood at around 3.33 million units, led by the massive Indonesian and Thai markets. This trend is expected to continue, taking sales close to four million units in 2020.
Boasting a total population of around 630 million people, the 10 countries comprising the Association of East Asian Nations (ASEAN) have seen vehicle sales top three million for six consecutive years since 2012. According to the ASEAN Automotive Federation (AAF), new car sales in the ASEAN region (excluding Cambodia and Laos) rose five percent year-on-year in 2017 to 3,339,693 units, a scale equivalent to around two-thirds of the Japanese market (approximately five million units). With national income on the rise within the region, the portion of the population purchasing cars will inevitably expand in the coming years, eventually creating an even larger vehicle market than in Japan.
Looking at the AAF figures for ASEAN new vehicle sales, these topped the three million mark for the first time back in 2012 (3,473,288 units) due primarily to (1) a steep rise in new car sales in Thailand (1,436,335 units, up 81 percent year-on-year) and (2) Indonesian new car sales rising 25 percent year on year to 1,116,212 units, crossing the million mark for the first time. Sales climbed even further in 2013 to 3,549,506 units. The next two years from 2014 fell on the previous year, but in 2016 the upward trajectory resumed.
Indonesia tops the region for the fourth consecutive year
Looking at new car sales in the eight main ASEAN member countries in 2017, Indonesia led the way with 1,079,534 units (up two percent Y-Y), followed by Thailand at 871,650 units (up 13 percent), and then Malaysia at 576,635 units (down one percent Y-Y). The order for the remaining countries was the Philippines (425,673 units; up 18 percent), Vietnam (250,619 units; down seven percent), Singapore (116,148 units; up five percent); Brunei (11,209 units; down 15 percent), and Myanmar (8,225 units; up 97 percent).
Since 2014, when Indonesia (1,208,019 units) first topped Thailand (881,832), the former has maintained the top position in ASEAN for four consecutive years through to 2017. Indonesia has the largest population in ASEAN—260 million people—which is roughly four times the size of Thailand (68 million), while Indonesian per capita GDP in 2016 stood at US$3,605. With US$3,000 said to be the threshold for people to start purchasing cars, motorization seems to have arrived in Indonesia.
Japanese cars account for more than 95 percent of the Indonesian market. Seven-seat multi-purpose vehicles (MPV) are the most popular type of car, comprising around 40 percent of the total market. To respond to strong Indonesian demand, Japanese auto manufacturers are moving actively to boost production, including expanding their existing factories in Indonesia and also building new ones.
Thai market starts to grow in 2017
After Indonesia, Thailand has the second strongest car sales in the ASEAN region. Thanks to measures encouraging new car purchases, new car sales shot up 81 percent year-on-year to 1,436,335 in 2012. They subsequently declined for four consecutive years from 2013 (1,330,672) to 2016 (768,788). However, restrained buying effectively ended around when former King Bhumibol Adulyadej passed away in October 2016, with Thailand registering a double-figure increase in 2017. Pickup trucks and small passenger cars are the vehicles of choice in Thailand, accounting for around 80 percent of the market.
Malaysia sits in third place in terms of ASEAN's new car sales. Looking at trends in the Malaysian market, sales broke the 600,000 mark in 2010 (605,156 units), and remained there through to 2015 (666,674 units). However, a slump in the domestic economy pulled the market back under 600,000 units in 2016 and 2017 (580,124 and 576,635 units respectively). Given Malaysia's population of 31 million, the ratio of passenger cars is far higher than in Indonesia and Thailand.
Vehicle sales in the Philippines, which has a population of more than 100 million, rose above 200,000 for the first time in 2014 (234,747 units) in 2014, and have since continued to grow steadily to above 400,000 in 2017. The Philippines now has the fourth largest number of new vehicle sales in ASEAN. It is followed by Vietnam, which has a population of 92 million; vehicle sales there have sat above 200,000 since 2015, but have not reached 300,000.
ASEAN market to reach around 3.5 million in 2018
Looking to prospects for the ASEAN market in 2018, sales are expected to be around the 1.12 million and 930,000 marks in Indonesia and Thailand and over 600,000 in Malaysia, in all cases marking a rise on the previous year. With the Thai economy recovering, sales there rose steadily over the January-March 2018 quarter. In Indonesia, the launch of new MPV models is expected to boost demand, while infrastructure investment should also prompt demand for commercial vehicles. Robust market growth is forecast for Malaysia in 2018, with strong consumer sentiment very likely to push the market over the 600,000 mark for the first time in three years.
Prospects are less clear in the Philippines and Vietnam. The buoyant Philippine market is beginning to be affected by a January 2018 excise tax hike, which may see 2018 new car sales undercut the 2017 figure of 420,000 units. In Vietnam, as of January this year, the government has made it compulsory for car manufacturing countries to supply quality assurance certificates when exporting cars to Vietnam, effectively limiting car imports and also impacting on sales. The number of units sold seems likely to be influenced by whether this situation continues, or whether the government revisits its policy. In any case, the growing number of middle-income earners in Vietnam is certainly boosting the desire to consume, and sales seem likely to be up around 250,000 again in 2018.
Adding in Singapore, Brunei and Myanmar, new car sales for ASEAN in 2018 are expected to be around 3.5 million. With income levels rising and increasing interest in new car ownership, ASEAN new car sales are expected to reach close to four million units by 2020.
About the Author
Hirotaka Yamakawa, Guest Researcher, JIJI Research Institute
Born in Goshogawara City in Aomori Prefecture. Graduated from Aoyama Gakuin University's Department of Law and joined the Editorial Division at Jiji Press in 1975. In charge of the former Ministry of International Trade and Industry and the Ministry of Agriculture, Forestry and Fisheries beat, as well as top reporter for automobiles, distribution (department stores, supermarkets, etc.) and the former Ministry of Finance. After serving as Deputy Director of the Economic Division and Gifu Branch Director, he became Deputy Head of the International Office, helping to launch Vietnam bulletins. Since 2012, he has visited Southeast Asia numerous times as a Jiji Research Institute guest researcher, interviewing Japanese companies with operations there. He also gives lectures on Southeast Asia at local branches of the Jiji Press Home and Foreign Affairs Council.