Flat Economic Growth To Put A Damper On Asian Car Market In 2016

CHIANGMAI, THAILAND - AUGUST 26 2015: Parking Area of Tesco Lotus Meechok. Location on road no.1101 about 3 km from chiangmai city. Chiangmai, Thailand.

The Southeast Asian car market is predicted to face a flat growth next year, that is; 2016, especially in consideration of the unstable state of the regional economy as a whole.

 

The market is expected to decline by a total of six percent this year, according to Ford Motor Company’s newly appointed president for Asia, Mark Kaufman. This is said to remain unchanged for the upcoming years, as well, given the three million vehicles that have already faced the six percent margin loss.

 

Adding to this are the prevailing Myriad factors that continually impact the market prospects in a negative fashion; seemingly driving the given economic conditions into jeopardy.

 

Newer rules and regulations are in line to follow for consequent application with Thailand’s latest excise tax coming into the picture. This excise tax is based on carbon dioxide emissions. It is projected to inevitably affect the future of the domestic vehicles and their retail prices from 2016 onwards. At the same time, Malaysia’s six percent goods and services tax may also take a toll on the market. This one will be put into effect from 1st April onwards.

 

In fact, a report mentioned by the Asean Automotive Federation says, the first time car buyer scheme introduced back in 2012 observed a regional car market surge of about thirty to four percent in Indonesia which is quite surprising, especially taking into account the 2008 financial crisis.

 

Thereafter, sales reached a new high with over three million vehicles being delivered as a result of the first  time car buyer scheme. Thailand saw a marginal rise of 2.31%, and a similar number of positive impacts on the domestic sales were observed in Indonesia, as well.

 

But, Asian market faced a major drop last year. Up to 10.1% to 3.19 million vehicles remained unsold. Moreover, even Indonesia posted a sale of 1.21 million vehicles down by 2%. Thailand posted a drop of 13.6% year-on-year for the period to 621,742 vehicles, while Indonesian sales fell by 17.9% to 853,008. Car sales in Malaysia slightly came down to  1% year-on-year to 541,142 vehicles in the January-October period, whereas Brunei saw a drop of 20.2% to 12,157. The Philippines depicted the sales increase of 22.4% year-on-year to 234,951 vehicles, along with Vietnamese sales up by 59% to 164,571.

 

Chairman of the Federation of Thai Industries’ automotive industry club, Mr. Ong-arj Pongkijworasin has, however, predicted a positive outcome next year. He expects the Philippine and Vietnamese car markets would perform well, thanks to their economic situation that is seeing an increasingly growing foreign direct investment.

 

Negative factors that strike as slight potentials to impact the economic structure of automobiles on the market, include low farm prices, decreasing private investment, more regulated approvals for hire – purchase financing and other slow state spending reasons among many more.

 

So, we can only wait and watch about what is destined for the Southeast Asia’s Car Market in the year ahead.