MAI 2016 REPORT: Malaysia auto industry on the up

The Malaysian Automotive Institute’s media briefing on the Malaysian automotive industry in 2016 yielded some unexpected positive news in contrast to the last few months of doomsayers belabouring the low new passenger car and commercial vehicle sales figures for 2016, a decline of 13% or 86,553 units compared to 2015. In 2016, 580,124 units were sold. Sales were 666,677 units in 2015. This is the Total Industry Volume which includes both imported and locally-assembled vehicles.

The good times were good while they lasted – six consecutive years of growth. 2016 was the first time since 2009 that TIV has fallen below 600,000 units. Total Production Volume for 2016 was 545,253, down 69,411 vehicles from 614,664 in 2015.

Dato’ Madani Sahari CEO of MAI stressed the significance of Total Production Volume (TPV) figures as a measure of industry performance as a holistic reflection of vehicles produced locally for both the domestic and export market. The MAI forecast TPV in 2017 to reach 570,000 units.

Of the top five performing car brands, Perodua led the market with a 35.7% share, more than double the next best-selling brand, Honda with 15.8%. Proton was third with 12.5%, followed by Toyota and Nissan with 11.0% and 7.0% respectively. Almost half, 48.2% of new cars sold in 2016 were either Perodua or Proton, an increase of market-share of almost 10% from 2015.

The sale of Energy Efficient Vehicles (EEVs) in the domestic market rose from 32.6% in 2015 to 39.3% as at November 2016. Fifty-nine car models assembled and sold in Malaysia have EEV status and benefit from tariff reductions. EEV numbers are expected to surpass 40% for the whole of 2016.

However, the automotive industry in Malaysia is also about the aftersales sector, export of Malaysia-assembled vehicles and the export of automotive parts and components produced in Malaysia and taken as a whole, the industry has grown over the last three years and will continue to do so in 2017.
In 2016, 25,850 jobs were created in the manufacturing sector alone, an increase of 8.7% from 2015. In the aftersales sector, 24,671 jobs were created, compared to 15,297 in 2015.

The number of cars assembled in Malaysia for export grew between 2015 and 2016. In 2015, 27,792 units were exported. As at June 2016, the latest figures provided by MAI, 15,603 units had been exported from a total export target of 30,000 for 2016. For 2017, exports are expected to reach 31,000. 122,610 units have been committed by eight car makers to be exported by 2020, with discussions underway with other automakers to raise the figure to 150,000 units. BMW, Hyundai, Mazda, Perodua, Proton and Volvo are just a few of the manufacturers who currently assemble cars in Malaysia both for domestic sale and export.

Most significant was the increase in value from export of automotive parts and components. This stood at RM4.7billion in 2014, rising sharply to RM9.8billion in 2015. As at June 2016, the value stood at RM7billion with a target of more than RM11billion for the year. The target for 2017 is RM12 billion.

The increase in exports of parts and components was the result of various programmes such as the Automotive Supplier Enhancement Programme (ASEP) and Automotive Component Export Enhancement Programme (PEKA) to improve the competency of the industry. Participants in the Programmes have seen an average increase of 24% in productivity since the inception of the schemes in 2014.

In the relatively new business area in Malaysia of “remanufacturing”, the sector recorded RM282 million worth of exports as at June 2016. This was just the value from 30 companies. An additional 313 companies which have been identified as producers of remanufactured components and their potential contributions to earnings are not part of the calculation. The export target for remanufactured parts and components for 2016 is RM513million with the figure expected to grow to RM750million in 2017.

And finally, the MAI confirmed that the B10 biodiesel programme in which 10% palm methyl ester (PME) is combined with 90% regular diesel has been put on hold indefinitely. Malaysia’s biodiesel is currently a blend of 7% PME with 93% diesel. The B10 biodiesel plan would only have affected EURO 2, not EURO 5 diesel, which would have remained at B7.

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