The ASEAN automotive market saw mixed fortunes in the primary quarter (Q1) of 2024, with some countries seeing declines and others seeing growth. Indonesia, despite a big decline in sales, maintained its position because the leading automotive market within the region. On the opposite hand, Malaysia recorded moderate growth, while Thailand experienced a big economic downturn.
Indonesia: Economic deterioration comes first
According to a report by Gaikindo, wholesale automobile sales in Indonesia in the primary quarter of 2024 decreased by 23.9%. Domestic carmakers only managed to deliver 215,069 units to dealers, a stark contrast to the upper performance recorded throughout the same period in 2023. Despite this decline, Indonesia maintained its position as ASEAN’s largest automotive market.
The aspects contributing to the decline in sales include:
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Weakening purchasing power: Economic instability affects consumer purchasing power, reducing demand for vehicles.
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Credit tightening: Rising rates of non-performing loans (NPLs) have led to tighter lending practices by financial institutions, making it harder for consumers to acquire auto loans.
Malaysia: Buoyed by domestic incentives
Malaysia emerged because the second-largest automotive market in ASEAN, recording a 5% increase in sales to 202,245 units in comparison with Q1 2023. The increase was attributed to the federal government’s economic stimulus package, which included a sales tax exemption on domestically produced vehicles. This incentive has been particularly useful for national automobile brands Perodua and Proton, which together hold 60% of the market share.
Other aspects contributing to sales growth in Malaysia include:
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Continuation of tax-exempt orders: Orders placed before the tax break resulted in mid-2022 continued into 2023, confirming sales data.
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Introduction of recent models: The introduction of recent, attractive models to the market, including electric vehicles, at competitive prices moreover increased sales dynamics.
Thailand: Challenges amongst vibrant spots for electric vehicles
Thailand, once considered the “Detroit of ASEAN”, saw a 25% decline in sales in Q1 2024, falling to 163,666 units, putting it third within the regional rankings. This downward trend has continued since June 2023 resulting from the increasing variety of non-performing loans for cars and the stagnation of the absorption capability of the domestic market.
Despite the general economic downturn, the Thai automotive industry has received a lift from the growing popularity of electrical vehicles (EVs), driven by an influx of Chinese automakers.
