New vehicle sales in Malaysia slumped 27.6% year on year (y/y) in March to 48,800 units, according to data released by the Malaysian Automotive Association (MAA). Passenger vehicle sales accounted for 43,247 units (down 27.3% y/y) and commercial vehicle (CV) sales 5,553 (down 29.8% y/y). Meanwhile, vehicle production dropped 20.4% y/y to 47,810 units during the month. Passenger vehicle output slipped 17% y/y to 45,802 units, while CV production tumbled 59% y/y to 2,008 units. In the first quarter of 2016 (January–March), industry sales fell 22% y/y to 131,267 units. Passenger vehicle sales totalled 117,373 units (down 21.3% y/y) and CV sales 13,894 (down 27.8% y/y). During the first quarter, vehicle production declined 20.8% y/y to 129,591 units. Output of passenger vehicles was down 19.5% y/y at 121,980 units, while CV production slipped 37.1% y/y to 7,611 units.
Significance: March's y/y sales decline was expected. The MAA anticipates a tougher year for the domestic automotive industry in 2016, with industry sales down 2.5% y/y.. A high base also deepened March's y/y decline this year. New-vehicle sales in Malaysia climbed 14.2% in March 2015 on automakers' discounts to clear stock ahead of the implementation of the goods and service tax (GST) on 1 April 2015. According to the MAA, sales volumes rose in March by 28.8% from February, mainly due to its more working days. While the MAA is maintaining a cautious outlook, IHS Automotive predicts industry sales in Malaysia will edge up 1.8% y/y in 2016 to 682,534 units, split between passenger car sales of 604,090 units (up 2.7% y/y) and CV sales of 78,444 (down 4.6% y/y). We forecast vehicle production in the country will gain 2.2% y/y to 638,830 units, split between passenger car output of 576,339 units (up 2.8% y/y) and CV output of 62,491 (down 3.1% y/y). We expect new launches, including sales campaigns and promotions, to be the key driver of domestic sales in 2016. According to our data, about 20 new/refreshed models are set to be launched in the country during the second half of 2016.
