New vehicle sales in Malaysia declined 24.8% year on year (y/y) in February to 37,876 units, according to data released by the Malaysian Automotive Association (MAA). Of this total, passenger vehicle sales accounted for 34,126 units (down 24.1% y/y) and commercial vehicle (CV) sales 3,750 units (down 30.9% y/y). Meanwhile, vehicle production fell by 25.2% y/y to 35,130 units during the month. Passenger vehicle output dropped 23.9% y/y to 33,480 units, while CV production slipped 43.8% y/y to 1,650 units. For the year to date (YTD), total industry sales now total 82,467 units, a decline of 18.3% y/y. This total is split between passenger vehicle sales of 74,126 units (down 17.3% y/y) and CV sales of 8,341 units (down 26.4% y/y). YTD vehicle production is down 21.1% y/y at 81,781 units. YTD output of passenger vehicles is down by 20.1% y/y at 76,178 units, while CV production has slipped 22.2% y/y to 5,603 units.
Significance: February's y/y sales decline was predictable as the MAA expects a tougher outlook for the domestic automotive industry in 2016, forecasting a 2.5% y/y slide in total industry sales this year. According to the MAA, a shorter working month and the continuation of more stringent hire-purchase loan approval conditions influenced the market's performance in February. While the MAA is maintaining a cautious outlook, IHS Automotive predicts total industry sales in Malaysia of 673,901 units during 2016 (up 2% y/y), split between passenger car sales of 601,068 units (up 2.1% y/y) and CV sales of 72,833 units (up 1.2% y/y). We forecast total vehicle production in the country to grow by 2.3% y/y to 628,231 units (up 2.5% y/y), split between passenger car output of 577,566 units (up 3% y/y) and CV output of 50,665 units (down 2.5% y/y). We expect new launches, including sales campaigns and promotions, to be the key driver of domestic sales in 2016.
