National carmakers to maintain market share

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KUALA LUMPUR: Consulting firm Frost & Sullivan GIC Sdn Bhd believes that national carmakers Perusahaan Otomobil Nasional Sdn Bhd (Proton) and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) will maintain their combined market share at some 50% this year due to the launch of various new models.

“We can clearly observe that the automotive market is going to be more competitive. The non-national mix has been steadily growing its market share. 

“But my expectation is that the national carmakers should be able to maintain their current market share, driven by their newly launched models that could increase sales volume in the market,” Frost & Sullivan senior partner Kavan Mukhtyar told reporters at the briefing of the consulting firm’s 2015 outlook on the Malaysian automotive sector here, yesterday.

Proton and Perodua saw their combined market share eroded to 53% in the first half of 2014 (1H14) (Proton: 21.2%; Perodua: 31.8%) from 59.9% in 2012 (Proton: 25.6%; Perodua: 34.3%), data from the Malaysian Automotive Association (MAA) revealed.

For the full year, Mukhtyar believes that Proton and Perodua should have achieved 20.1% and 33.1% respectively, resulting in a combined market share of 53.2%, lower than 2013’s 54.1%, due to the expansion of the non-national car segment’s share.

“For the first time, Honda is able to more than double its market share to 13% in 2014 from 6.3% in 2012, aided by the launch of its latest City and Jazz models. Similarly, Toyota increased its market share to 12.3% in 2014 from 10.6% a year ago, due to positive response to the latest version of its Vios and Altis models,” he said.

MAA president Datuk Aishah Ahmad too expects the market share of Proton and Perodua to increase marginally or be maintained this year. 

As it is, she said sales for national cars should have picked up at end-2014, due to the launch of new models, which will improve the market share of national cars and improve sales volume.

“In 2015, production capacity is also projected to increase and we believe national cars are value for money with their new styling,” she added.

However, she noted that as other industry players are dishing out attractive rebates to protect their market share, national cars may face increased competition this year.

Meanwhile, Mukhtyar said Frost & Sullivan expects vehicle sales — also known as total industry volume (TIV) — to increase 3.15% to 685,950 this year from an expected 665,000 in 2014. Their target is lower than MAA’s 2015 forecast of 693,500.

The growth, he said, will be driven by the launch of new models at competitive prices, positive consumer sentiments and encouraging economic outlook.

“The high back orders in 2014 for Perodua Axia and Proton Iriz, as well as positive response to other models such as Honda City and Honda Jazz are likely to support vehicle sales growth this year. Coupled with the declining fuel prices, this should also maintain the national carmakers’ position with positive sales in the first quarter of this year,” said Mukhtyar.

But he warned that the increase in overall cost of vehicle ownership and credit tightening measures by financial institutions could hamper growth.

“As such, manufacturers may want to opt for campaigns such as low interest rate and free maintenance programme  to boost sales this year,” he added.

The full-year figure for 2014 is yet to be released but for the first 11 months to Nov 30, 2014, TIV grew 1.1% to 601,805 units from 595,300 a year ago, on year-end promotional campaigns and new models. MAA said sales volume for December 2014 is expected to be higher than November 2014. 

Going by current trends, Mukhtyar said Malaysia may take a “few years more after 2020” to achieve a TIV of one million.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed on Jan 20 last year said Malaysia is expected to generate a TIV of one million and a total production volume of 1.25 million by 2020, which should boost passenger car exports to 250,000 units from 20,000 currently.

Currently, Indonesia and Thailand are the only two Asean countries whose TIVs have breached the one million mark. In 2013, Indonesia’s TIV stood at 1.23 million while Thailand registered 1.33 million.

On the impact of the goods and services tax (GST) that will be implemented on April 1, Mukhtyar expects the price for the premium car segment — which commands higher margin — to increase by between 1% and 2%, while the price for the mass-market segment is anticipated to decrease by between 1% and 3%.

Under National Automotive Policy 2014’s car price reduction framework, the government expects car prices to be gradually reduced by between 20% and 30% by 2017.

 

This article first appeared in The Edge Financial Daily, on January 8, 2015.