Boston, MA -- (ReleaseWire) -- 03/24/2014 -- Malaysian auto production grew 5.6% in 2013, to 601,407 units. While passenger car production registered healthy growth of 6.7%, to 543,892 units, output in the commercial vehicle (CV) segment contracted 4.1%, to 57,515 units. For 2014, we expect growth in both CV and passenger car production, and forecast overall auto production growth to come in at 5.6%, to 635,000 units.
Total vehicle sales figures for 2013 from the Malaysian Automotive Association (MAA) came in at a record 652,120 units, growing by 3.9%, and not far from BMI's forecast of 653,415 units.
While vehicle sales contracted on a year-on-year basis for the final three months of 2013, we do not believe it represents any fundamental weakness in market demand. According to the MAA, there were some technical glitches in the Road Transportation Department's mySIKAP registration system in October and November 2013, which resulted in a slower vehicle registration process and, therefore, lower sales.
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The revised National Automotive Policy (NAP) contains incentives to promote the production of energyefficient vehicles (EEVs). We believe this segment is poised to increase its popularity in the South East Asia region especially as the governments in various countries choose to lower their fiscal burdens by curbing fuel subsidies, which results in higher pump prices. A case in point is Indonesia, where the introduction of low-cost green cars since September 2013, has already seen the segment garner sales of over 35,000 units (as of January 2014) as consumers welcome fuel-efficient models in the face of rising living costs. We believe the passenger car segment in Malaysia could experience a similar sales boost as local production of EEVs expands.
ETP To Continue Pushing CV Sales
Malaysia's ETP, a government-led initiative to transform the country into a developed nation by 2020 through investments in key economic sectors, will continue to drive CV demand through the large infrastructure projects under it.
We also have a stable outlook for interest rates and expect the central bank to keep its policy rate on hold at 3.00% throughout 2014 (see 'Price Hikes Not A Concern For BNM', December 19 2013). The resultant stability in project financing will auger well for the construction industry. Our Infrastructure team forecasts 10.0% growth for the industry in 2014 and we believe this will provide strong support to CV sales and our forecast for 4.0% growth in the segment.
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