Frost & Sullivan sees 2pc growth this year
KUALA LUMPUR: Favourable economic growth and a strengthening ringgit will likely boost total industry volume (TIV) in the automotive sector this year.
Frost & Sullivan Mobility senior vice-president Vivek Vaidya expects the vehicle sales growth rate of two per cent to breach 600,000 units this year, a level not seen since 2015.
The introduction of new key models into the market would also drive sales this year, he added.
“The economy is expected to continue recording positive growth in 2018, driving consumer confidence throughout the year.
“The stronger ringgit is also likely to reduce the cost of parts and complete built-up (CBU) models in 2018,” Vivek told a media briefing here.
Vivek said other factors, such as the National Automotive Policy (NAP), improvements in public transport infrastructure as well as the growth of the ridesharing market would impact Malaysia’s automotive market in the long term, but were unlikely to have any significant impact in 2018.
“While persistent high household debt will continue to encourage cautious spending, expected wage growth is likely to provide the requisite counterweight,” he added.
TIV started to decline in 2016 after recording an upward trend in the last three years. Last year, vehicle demand went up by 1.6 per cent as economic recovery and rising consumer confidence resulted in higher demand for passenger vehicles, said Vivek.
He said commercial vehicle demand continued to contract last year for the fourth year in a row amid cautious business sentiment.
“Higher wages resulting from economic recovery led to improved consumer sentiment, pushing up sales last year, but were negated by restraints like accompanying inflationary pressures and stringent loan approvals,” said Vivek.