High demand in first half-year leads to revised 2023 forecast

When the last day for delivery of vehicles exempted from sales tax ended on March 31, 2023, there was uncertainty how the market would become. In the months prior to March demand had been high as people wanted to take advantage of the money-saving provision by the government to help the car industry recover.

However, would this high demand mean that the second quarter would see a decline? The Malaysian Automotive Association (MAA) was cautious in its forecast at the beginning of the year. Although Perodua was optimistic, many other companies took the view that the record of 720,658 units set last year would not be matched again – and the 2023 Total Industry Volume (TIV) might even be lower. Thus, the forecast offered was 70,000 units lower at 650,000 units.

Revision of forecast upwards
The association has now revised its forecast for 2023, going from a lower number to one that is 4,342 units (0.6%) more than the 2022 TIV – 725,000 units. This change comes from seeing how the market has performed during the second quarter of the year, with the TIV reaching 366,037 units after 6 months. That’s 10% higher than the TIV for the same period in 2022.

Of course, there was the big push this year during the first quarter to get vehicles delivered before March 31. But there’s are also many new players in the market this year (especially from China) and with the duty-free incentives for EVs, sales are expected to be consistently high.

At least 60,000 units/month
While April saw a dip, the TIV for May and June were above 60,000 units. In the second half of the year, this is the level at which the TIV has to be each month in order to achieve the new forecast.

Stable economic outlook but…
However, sustainability of the market performance will depend on Malaysia’s economic indicators which obviously impact market buying sentiment. Presently, the economic outlook appears stable, and the Malaysian economy is projected to expand between 4% and 5% during 2023, driven by domestic demand.

“Nevertheless, consumers’ spending may also soften in the remaining months, due to worries over rising costs of living, shrinking disposable income, weakening ringgit against major foreign currencies, and uncertainties about the domestic and global economic environment,” warned Mohd Shamsor bin Mohd Zain, President of the MAA.