THAILAND REPORT
Rankings of new vehicle sales in Southeast Asia are shifting, with Malaysia overtaking Thailand to take second place in 2023. The Philippines overtook Vietnam to take fourth place. EV sales continue to grow across the region, particularly in Thailand.
New vehicle sales in six major Southeast Asian countries, including Indonesia and Thailand, totaled 3.34 million units in 2023, down 2% from the previous year. This was the first decline in three years. Rising interest rates weighed on the market. In Southeast Asia, customers with low equity often buy cars with car loans, which was affected by higher lending rates and stricter underwriting.
Despite the headwinds, sales increased in Malaysia and the Philippines. Sales in Malaysia rose 11% to 790,000 units, a record high, and the country became the second largest market in the region for the first time. The introduction of sales tax exemptions for domestically produced vehicles as part of an economic stimulus package provided a boost.
The growth rate of private consumption in 2023 was a robust 4.7% y/y, leading to market expansion. Produa, the domestic automaker with the largest market share, grew 17%. Sedans and other vehicles performed well. Proton, another national carmaker with the second largest market share, rose 11%.
In the Philippines, sales rose 20% to 410,000 units, moving the country up to fourth place, as domestic demand increased on the back of population growth. The country’s real gross domestic product (GDP) growth was strong at 5.6% in 2011, and the easing of the impact of the semiconductor shortage also boosted sales.
Source: The Nikkei
PSR Analysis: The automotive market in Southeast Asia is changing rapidly. Thailand and Indonesia have been the two strongest markets, but this report that Malaysia has overtaken Thailand is a big surprise.
The simple explanation is that Malaysia’s sales have been boosted by subsidies, while Thailand’s have been slowed by stricter credit checks. Malaysia is enthusiastic about having its own car brands and has historically been aggressive in growing its own auto industry.
As a SE Asian market where policy interest rates have a significant impact, it is difficult to expect Thailand to see a rapid recovery in sales volumes in a market where interest rates are expected to remain high for some time. Similarly, interest rates are holding back sales in Vietnam; EVs are gradually growing in all countries, but there are concerns about a prolonged period of stagnation in the market. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
