51% increase in new vehicle sales in October takes TIV past 47,000 units

New vehicle sales in the month of September were at the lowest level in a long, long time though it was expected after the intense period between June and August when the Total Industry Volume (TIV) rocketed upwards. With GST having been removed and the new Sales & Services Tax (SST) not being introduced, it was an unprecedented ‘tax holiday’ which many people took advantage of to get new cars or replace their old ones earlier than they might have intended to since the savings were significant enough.

When SST was introduced in September, the total price of purchases rose and not surprisingly, the market contracted. From an average of around 66,000 units a month in June, July and August, the TIV for September dropped to 31,241 units. The last time the TIV was at that level was in 2009.

Source: Monthly reports of the Malaysian Automotive Association

The expectation for October was not optimistic and, in fact, most people in the industry do not see a significant increase till December when the end-of-year promotions may attract people. Typically, December does see a boost in sales as some offers are very good and persuade people not to wait till a new year to get their car.

But things did pick up in October as the TIV rose to 47,273 units which was 51% higher than the September numbers. That level was in the same range as most of the months earlier in the year so it would seem like a return to ‘normalcy’. Compared to the same month in 2017, the difference is only 0.5% so it would look the market has stabilised.

However, in 2017, the cumulative TIV for 10 months had reached only 472,719 units and it looked like a struggle to meet the forecast of 590,000 units for the year (the final figure for 2017 was 576,635 units). This year, after 10 months, the cumulative TIV has reached 502,244 units and while there were those 3 months of boom time for sale, the forecast is 585,000 units.

This means that the new vehicle sales in November and December will have to be around 41,400 units, which seems quite possible.

Things look ‘calm’ now with the normal pattern of purchasing and hopefully, there won’t be a sudden announcement of the new National Automotive Policy to upset the market. With the PM’s stated position that non-Malaysian makes are enjoying easy access into the market without reciprocation by the countries where those makes come from, there may be moves to change things and induce people to buy Malaysian brands.

[Chips Yap]