Thu. Sep 29th, 2022



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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Posted 23 August 2022 by Jessada Thongpak, Senior Analyst, Light Vehicle Production Forecasting, ASEAN, S&P Global Mobility

and



Mayuree Chaiyuthanaporn, Senior Analyst, ASEAN Light Vehicle Sales Forecasts, S&P Global Mobility

and



Oracha Sakunbunma, Senior Analyst, ASEAN Light Vehicle Sales Forecast, IHS Markit


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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