ASEAN sales
July 2022: +52.9%; 250,481 units vs. 163,836
units
YTD 2022: +23.8%; 1,814,156 units vs. 1,465,179
units
- Light vehicle sales in the Association of Southeast Asian
Nations (ASEAN) recorded about 250,000 units in July 2022, an
increase of 53.0% compared with July 2021. In the year to date
(YTD), the market increased 24.0% to around 1.81 million units. The
ASEAN market should increase 3.6% to 2.87 million units in
2022.
- Thai light vehicle sales in July 2022 increased 24.4% year on
year (y/y) to about 62,900 units. Sales received a boost from the
economic recovery, continued easing of COVID-19 control measures
and countries reopening; the government’s new electric vehicle (EV)
policy; and a low base in 2021 when the country had a low
vaccination rate and was hardest hit by Delta.
- Thai consumer confidence in July increased for the second
straight month. Consumers believed that economic conditions had
started to pick up slightly owing to improved business activities
and strong exports. Plus, there are fewer concerns over the
COVID-19 situation because of the high vaccination rate and mild
symptoms of the current variants. Thailand’s headline inflation
slightly declined in July, helped by government support measures,
but the pace was still near a 14-year high. To curb rising
inflation, the Bank of Thailand raised the policy interest rate
from 0.50% to 0.75% for the first time since 2018 in August 2022,
and it might continue to increase the rate twice this year. The
bank expects inflation to remain high for the rest of the year at
6.2% in 2022, before gradually falling to its target range at 2.5%
in 2023, as supply-side price pressures ease.
- According to the IHS Markit July 2022 database, the Thai
economy is set to improve by 3.0% and 4.0% in 2022 and 2023,
respectively, led by recovering domestic consumption, especially in
the services sector, strong exports, and the pickup in foreign
tourists. Real GDP in second quarter 2022 expanded by 2.5% y/y,
accelerating slightly from 2.2% y/y growth in the first quarter of
2022. However, the current Russia-Ukraine conflict and the US-China
relationship may constrain Thai GDP growth in 2022 owing to rising
inflation, supply constraints, and financial market
volatility.
- Vehicle sales during January-July 2022 hit 478,300 units, which
marked a 16.0% y/y increase, thanks to pent-up demand and rising
consumption. In addition, the chip shortage issues and automotive
production in the first half of 2022 were much better than
expected. With the strong performance and improved consumer
confidence, we plan to upgrade the 2022 Thai sales forecast in the
next round. Nevertheless, we still expect slower sales growth for
the remainder of the year because of economic challenges. High
inflation from increasing energy and commodity prices, the food
crisis, and the increasing interest rate will worsen automotive
sales demand. The semiconductor and supply chain crisis will still
be a major risk for Thailand’s car production in 2022.
- xEVs continue to garner interest from consumers, in line with
the global rise in petrol prices and the electric vehicle (EV)
popularity during the COVID-19 outbreak. Concerns over fine
particulate matter (PM2.5) pollution in Thailand also contribute to
their popularity. Plus, the government’s launch of the 2022
battery-electric vehicle (BEV) consumer incentives, which include a
reduction of completely built-up (CBU) import taxes, a reduction of
the excise tax, and a cash subsidy worth up to THB150,000, are
expected to boost BEV-segment sales starting in 2022. Newcomers
Neta and BYD will likely launch several BEVs to join the race in
2022. Meanwhile, the continued fast-growing e-commerce business and
in-home delivery services will also support demand for
pickups.
- In the short term, the COVID-19 pandemic and the Russia-Ukraine
war will continue pressuring the economy, businesses, consumer
behaviors, and the automotive market. A k-shaped recovery is
expected among business sectors, while high household debt reaching
90% of GDP will hamper the ability to pay debt, affect decisions to
buy high-valued goods, and cause stricter loan approvals from
financial institutions. The sales recovery is expected to be
further delayed, returning to the pre-pandemic level later than
2023. Sales should also be supported by the new elections in 2023,
the urban expansion after the completion of the megaproject on
public transportation, and substantial overseas investments to join
the Eastern Economic Corridor (EEC)—Thailand’s new flagship
economic zone. The urban expansion will continue as many companies
could allow more remote working and relocation away from crowded
big cities; bordering provinces have also gained free-trade and
labor opportunities with the creation of the ASEAN Economic
Community. The government’s EV scheme will contribute to Thai
market demand in the medium-to-long term. The continuous
new-vehicle launches and the global battery price decline will lead
to better affordability and a wider target consumer range in the
future. In the longer term, the automotive industry will grow at a
slower pace as penetration levels and public
transportation—especially the Skytrain in Bangkok—expand.
In addition, there are more concerns about limited roads, and high
traffic congestion in big cities will be a threat in the
future.
- Indonesia’s light vehicle market in July 2022 increased 29% y/y
to a record 80,000 units. The growth was due to the low base of
comparison in July last year, when the country had restricted
community activities in Java, the largest contributor to car sales
every year. Bali recorded a spike in COVID-19 cases. Consumer
confidence in July 2022 remained strong on the back of strong
expectations for future economic conditions, especially in income
and employment. Sales also increased because of the higher
second-quarter economic results, hitting a four-quarter high. The
5.44% y/y GDP growth rate was recorded in second quarter 2022, up
from the 5.01% y/y set in the preceding quarter. The second quarter
also showed solid growth in household consumption on the back of
easing concerns over the pandemic and impressive export growth,
thanks to high commodity prices. In the coming months, inflation
risk (highest in seven years in July 2022) stemming from rising
oil, food, and service prices, and vehicle selling price increases
from the rupiah depreciation may become challenges and affect
consumer spending. In the year to date, the Indonesian market
increased 22.0% y/y to around 521,000 units.
- The market in 2022 should be better than 2021, increasing 2.3%
to around 0.84 million units owing to the economic recovery, new
nameplate introductions, accelerated vaccination rates, and
attractive auto policies. GDP will accelerate in 2022 to 5.04%
because of the consumer spending recovery and a still-growing
middle class leading to private consumption growth. New nameplate
introductions will stimulate the market, including the Toyota
C-MPV, the Honda BR-V, the Honda HR-V, and the Hyundai Stargazer.
The widespread use of the COVID-19 vaccine—the government
kicked off a COVID-19 booster program for the general public on 22
January to increase protection from the Omicron variant—should
boost consumer confidence. The luxury sales tax discount was
officially extended at the beginning of February, and the 2022
scheme targets the passenger vehicle segment with displacement of
up to 1,500 cc, prices up to IDR250 million, and at least 80% of
local purchase components. However, higher oil prices,
semiconductor availability, high raw material prices due to the
Russia-Ukraine crisis, and distribution of vaccines to more remote
areas are still concerns.
- In the short-to-medium term, Indonesian car sales should
continue to rise owing to robust demand, product refreshment,
further corporate tax cut expectations, as well as public
infrastructure improvement. The chip shortage situation will likely
impact automotive supplies and sales during the short term, and
demand should rebound in the medium term after the situation starts
to recover. The high raw material prices due to Russia-Ukraine
tension would dent market performance through the medium term as it
will likely raise car prices and add pressure to the affordability
of a new car. For the longer term, the market should grow owing to
the rising middle class. Considering the penetration rate in the
country is still low, there remain plenty of opportunities for
further growth in the years ahead. However, mass rapid transit
(MRT) programs may result in consumers prolonging the decision to
buy a new car, because MRT can accommodate many people at the same
time through business areas that currently face severe traffic
jams.
ASEAN production
July 2022: +36.0%; 282,144 units vs. 207,443
units
YTD 2022: +13.9%; 2,204,597 units vs. 1,935,963
units
- The Association of Southeast Asian Nations (ASEAN) region’s
light vehicle production in July 2022 posted significant growth of
36% year on year (y/y) with 282,144 units compared with the low
base in July 2021; year-to-date (YTD) production in July 2022 also
surged 13.9% y/y, recording 2.2 million units, largely driven by
the robust production during the first half across the region.
- In the August forecast release, we upgraded the 2022 outlook to
138,000 units owing to the stronger-than-expected actual production
during the first half of 2022—particularly in Indonesia,
Malaysia, and Thailand—as well as the improving availability of
the supply chain in the second half of the year as most OEMs ramp
up production for backorder fulfillments and inventory rebuilds.
However, the global automotive industry will continue to face
semiconductor shortages throughout 2022 amid surging demand and
chipmakers’ pressured capacity. Moreover, soaring inflation caused
by rising energy and food prices have forced the central banks
across the region to hike interest rates to curb headline
inflation, which should deteriorate automotive demand during the
immediate term and the remainder of the year. Consequently, we now
anticipate ASEAN’s light vehicle production forecast for full-year
2022 to grow 6% y/y with 3.7 million units.
- We also upgraded the ASEAN region’s 2023 outlook by 39,000
units because it may take OEMs until mid-2023 to fulfill 2022
backorders; this is owing to the ongoing semiconductor supply
crisis coupled with chipmakers’ capacity bottlenecks. Nevertheless,
the outlook for 2024 was slashed by 42,000 units as we have
incorporated the further demand destruction effect in the
short-to-medium term for the year; this will deteriorate global
automotive demand and production more significantly than previously
anticipated through the longer term.
- Thailand’s light vehicle production in July increased 11.4%
y/y, with 129,957 units built, while YTD production for the first
seven months of 2022 rose 1.5% y/y, or 0.97 million units produced,
owing to the robust domestic and export demand during first half of
2022 and the improved supply following the easing of mainland China
lockdowns in early June. However, OEMs continued to face the chip
supply shortage throughout July given the constrained supply and
chip makers’ capacity bottlenecks—evidenced by major OEMs
including Nissan and Toyota having halted production at their
plants for certain days during July.
- In August, Ford and Toyota announced they would ramp up the
production outputs from August onward on the back of the improving
supply chain and increased availability of chip supply. Moreover,
Ford planned to accelerate production from September to fulfill the
backorders from the key export markets (mainly for Australia) in a
bid to reduce the waiting period from 8-12 months to 5-7 months. In
the meantime, however, Toyota decided to cut the production of
pickup, pickup-based sport utility vehicles (SUVs), and sedans
during August-September given the semiconductor supply issue.
Toyota planned to increase production from October onward for the
build-back outputs. In contrast, Toyota decided to ramp up the
best-selling Toyota Corolla Cross during September-October for both
domestic and export. On a separate note, Nissan announced it would
operate only one-shift production during the third and fourth
quarters of 2022 owing to the ongoing semiconductor shortage.
Following suit, Isuzu also slashed the third-quarter production
target owing to the short supply of semiconductors but expects to
increase output in the fourth quarter of 2022.
- Thailand’s completely built-up (CBU) exports in 2022 will
likely maintain strong momentum, accounting for 58% of the
country’s total production. Full-year 2022 light vehicle production
is now forecast to reach 1.7 million units, marking moderate growth
of 2.5% y/y. Pickup production will remain the country’s mainstream
with over 1.02 million units, while the surging demand trend for
SUVs will continue to significantly drive the overall production of
the passenger car segment in light of the growing demand trend for
hybrid-powered SUVs.
- We upgraded the 2023 outlook from our previous forecast by
17,500 units, resulting in full-year production of 1.86 million
units, an increase of 8.9% y/y. Most major OEMs should continue to
ramp up production through mid-2023 for the 2022 backorders due to
semiconductor supply constraints. However, we downgraded the 2024
outlook by 23,500 units largely owing to the demand destruction
effect that we now expect will hurt global automotive demand in the
short-to-long term, more significantly than previously anticipated,
but full-year 2024 production should rebound to surpass 2 million
units, the pre-pandemic level in 2019.
- Thailand’s GDP expanded 2.5% y/y in the second quarter of 2022,
supported by the robust export and revived tourism sector, while
the country’s inflation slowed to 7.61% in July after marking a
14-year high of 7.70% in June owing to the soaring energy price and
food crisis. Higher raw material prices and the supply chain
disruptions have weakened the automotive manufacturing and car
market outlook. In August, the Bank of Thailand (BoT) raised the
policy interest rate by 0.25 basis point, from the current 0.50
basis point to 0.75 basis point in an attempt to curb soaring
inflation. We expect Thailand’s 2022 GDP to expand 3.02% y/y driven
by the economic recovery following the COVID-19 pandemic.
- Indonesian light vehicle production in July 2022 posted robust
growth of 21% y/y, with 84,908 units. YTD production in July was up
24.7% y/y, largely driven by strong domestic market
demand—particularly the mainstream B-Segment multipurpose
vehicles (MPVs) and SUVs as well as the low-cost green car (LCGC)
segment. In addition, the CBU export momentum continues to record
steady growth over 30% y/y. However, we anticipate a weaker
production outlook for the second half of the year because of the
ongoing supply chain crisis coupled with the slower economic
recovery pace amid surging inflation and energy prices. Therefore,
we maintain the previously forecast production outlook for full
year 2022 of 1.09 million units with only a minor volume
adjustment. However, the Indonesia production forecast for
full-year 2023 was slashed by 9,300 units owing to the ongoing
global chip supply issue as well as the deteriorating domestic
demand outlook in the wake of high inflation and the economic
slowdown. We also slashed the 2024 outlook by 23,500 units owing to
the demand destruction effect from inflated vehicle price tags,
rising material costs, and concerns over slower global economic
expansion through the longer term. However, we forecast Indonesia’s
2024 production to rebound to the pre-pandemic level with 1.2
million units produced, driven by the stable auto market demand,
while Indonesia’s total CBU exports will continue to expand to
nearly 39% of total production by 2025 owing to the stable export
demand outlook for MPVs and SUVs to emerging markets.
- Recently Toyota announced it would further invest USD1.8
billion for electrified vehicle production in Indonesia through
2025, while Mitsubishi planned to spend USD660 million during
2022-25 for the investment of the hybrid electric vehicle (HEV) and
battery-electric vehicle (BEV) production in Indonesia. In August,
Tesla reportedly signed the deal worth USD5 billion to purchase
nickel products from nickel processing companies in Indonesia.
However, Tesla and the Indonesian government are still in
negotiations for Tesla’s investment of EV assembly and EV battery
manufacturing in Indonesia.
- Indonesian GDP in the second quarter of 2022 expanded 5.44%
y/y, driven by the rising commodity prices and household
consumption after the lifting of COVID-19 restrictions; however,
the GDP growth outlook for 2022 will remain constrained at 5.0%
amid rising inflation amid the global economic slowdown.
- In July, Malaysia’s light vehicle production recorded 45,708
units compared with the low base output of 2,557 units recorded in
July 2022 during Malaysia’s nationwide lockdown. YTD output surged
46.2% y/y owing to the low base effect coupled with OEMs’ strong
production result since early 2022, which was driven by the
government’s sales and service tax (SST) exemption program that
expired in late June. However, despite the SST program having
expired, cars purchased by 30 June 2022 can still be registered by
31 March 2023. Most major OEMs reportedly received overwhelming
bookings as the combined backorder volumes reached nearly 0.2
million units, which must be delivered to car buyers within the end
of first quarter 2023. OEMs including Perodua and Proton are
ramping up full-scale production during August amid the concern
over the chip shortage; we anticipate that most OEMs will struggle
to acquire chips throughout 2022, and it may take until the second
quarter of 2023 to fulfill the backorders.
- For full-year 2022, we now expect Malaysia production to reach
nearly 0.6 million units, up 26.6% y/y. Malaysia’s light vehicle
production should continue to grow in 2023, mainly boosted by the
spillover effect from the backorder fulfillment of 2022. Malaysia’s
economy grew 8.9% in the second quarter of 2022 compared with the
same period in 2021 owing to the economic recovery from the
pandemic crisis during 2020-21; the government estimated the growth
for full-year 2022 between 5.5% to 6.5% on the back of continued
economic expansion in global demand and higher expenditures in the
private sector.
- We upgraded Vietnam’s 2022 production by 2,800 units mainly
supported by the stronger-than-expected actual production recorded
during the first seven months of 2022 and thanks to stable economic
growth and domestic demand. Vietnam’s full-year 2022 light vehicle
production should now rise 6.3% y/y, or 0.24 million units, and it
should continue to expand to the new record high of over 0.32
million units in 2023 owing to the strong domestic market as well
as VinFast’s export strategies.
- In our August forecast round, we made a further reduction by
91,000 units on an annual basis during 2025-30 for the ASEAN region
to reflect the demand destruction effect. Global automotive demand
will likely decline given concerns over the worsening
outlook—from rising manufacturing costs and car prices
following the pandemic (and amid the supply chain crisis) to slower
economic growth throughout the forecast horizon. Nevertheless, the
ASEAN region will brace to return to the pre-pandemic level by 2024
with nearly 4.4 million units; however, it will be a longer road
ahead to hit a new record high of nearly 5 million units in 2027,
on the back of strong economic fundamentals and the rising middle
class through the longer term. Thailand and Indonesia will
gradually become a manufacturing base of electric vehicles (EVs),
including hybrid electric vehicles (HEVs), plug-in hybrid electric
vehicles (PHEVs), and battery-electric vehicles (BEVs). EVs will
now likely account for nearly 40% of the country’s total production
by 2030. After the recent investment plans of Hyundai and
Toyota/Daihatsu, we anticipate Indonesia to become the key regional
production base for EVs. In March 2022, Hyundai commenced local
assembly of the IONIQ 5 at its Indonesia plant for the first time
in Asia (after South Korea) and is considering the export of more
internal combustion engine (ICE) vehicles and BEVs for the ASEAN
and Oceania markets on the back of the free-trade agreements (FTAs)
from mid-2022 onward. More mainland Chinese OEMs, including BYD and
Chery, have announced longer-term investments in their
manufacturing facilities in the ASEAN region to expand their
exposure with more export potential of right-hand-drive (RHD) ICE
vehicles and BEVs.
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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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