Frost & Sullivan revises upwards Malaysia's vehicle sales forecast

Frost & Sullivan has revised upwards this year's total industry volume (TIV) forecast by 6.3 per cent to 638,000 units, from 600,000 units estimated earlier.

This was due to positive consumer sentiment, enthusiastic response to key new model launches and lower expectation of any significant price reduction from policy initiatives, said the business consulting firm in a statement.

Partner and Head of the Automotive and Transportation Practice, Asia Pacific, Kavan Mukhtyar said the revised forecast was necessary as the likely impact of Malaysia's electoral uncertainty, during the run-up to the 2013 General Election (GE), was not as high as expected.

He noted that sales volume for July was expected to recover, as consumers purchase new vehicles due to the upcoming Hari Raya festive season.

"The recent efforts by Bank Negara to reduce household debt may not have an immediate adverse impact as automotive loan approvals had already been tightened since last year," Mukhtyar was quoted as saying in the statement.

Mukhtyar said August could witness moderate performance as sales were expected to decline due to the long Hari Raya holidays while September sales could be slower ahead of the 2014 Budget announcement on October 25.

However, he said vehicle sales was likely to pick up in the fourth quarter of the year following the budget announcement and the start of the year-end festive season, which traditionally see plenty of sales promotions offered by automakers.

In the first half of the year, Mukhtyar said vehicle sales was expected to grow four per cent, year-on-year, (y-o-y) to reach 314,000 units compared with 301,269 units in 2012.

"The robust sales were contributed by positive consumer sentiment, aggressive promotional campaigns, prior to Chinese New Year, along with additional incentives for new car purchases," he said.

Mukhtar also said sales were also contributed by customers delaying vehicle registration in order to receive their vehicles in the New Year.

For the first quarter, overall sales volume rose 13.8 per cent, y-o-y, to 157,664 units against 138,544 units in the same quarter last year.

TIV for the second quarter, however, slipped four per cent, y-o-y, due to the uncertainties surrounding the GE as consumers adopted a cautious approach in anticipation of the announcement on the revised National Automotive Policy.