The Southeast Asian auto industry continues to suffer from the effects of the new coronavirus. New car sales in April were down 80% year-on-year due to restrictions on activity in each country. New car sales in the six major countries were down 82% in April from a year earlier to 51,063 units.
The biggest declines were in Malaysia and the Philippines, where sales were down 99.7% and 99.5%. Both countries began restricting activity in March, with production and sales of cars almost completely halted in April. Indonesia, the largest market, was down 91%. Thailand sales slumped 65%, although car dealerships operated under a declared state of emergency.
Combined sales in Indonesia, Thailand and Malaysia could fall 40% in 2020 compared to 2019. A restructuring of the production system has also occurred. Nissan will close its plant in Indonesia and outsource the production to Mitsubishi Motors.
Source: The Nikkei (The original article was partially revised by the author.)
PSR Analysis: The supply of components from China, which was temporarily disrupted, has begun to recover, and supply chains outside of China are being rebuilt. Lockdowns and other restrictions are beginning to ease, and the system for restarting production sites is being put in place.
But even if production capacity returns, demand is still a key concern.
Southeast Asia has been positioned as a potential market due to population growth and income growth. Also, it already has a significant presence as a global production base. For example, Thailand exports finished vehicles to more than 150 countries.
For many companies with production bases in Southeast Asia, particularly Indonesia and Thailand, a recovery in demand from within and outside the region will be a major driver to ensure the continued existence of the Southeast Asian automotive industry, considered a strategically important base for the region. In the short term, the industry will recover from the March/April slump, but the long-term outlook is very uncertain. PSR
Akihiro Komuro Is Research Analyst, Far East and Southeast Asia, for Power Systems Research
