Malaysia Set to Surpass Indonesia as ASEAN’s Leading Auto Market

Malaysia, now the second-largest automotive market in Southeast Asia, is rapidly overtaking Indonesia, thanks to strong consumer spending and economic growth. As we had reported back in May 2024, Malaysia surpassed Thailand to move up to the second spot.

Nikkei Asia's study of sales statistics from five Southeast Asian countries from April to June shows that Malaysia's vehicle sales were now only 8,134 units behind Indonesia's, a significant improvement over the 89,474-vehicle difference from the first quarter of 2023.

With robust private consumption driven by low inflation, which ranges between 1.7% and 2.0%, and a rising ringgit valuation has made expensive purchases like vehicles more accessible. This is coupled by Malaysia's healthy 5.9% GDP growth during the same period.

Additionally, Malaysian Automotive Association (MAA) had reported an 8% year-on-year (YoY) increase in second-quarter, totaling 184,702 vehicles, driven primarily by the popularity of national brands Perodua and Proton.

Perodua remains highly popular in Malaysia thanks to its affordable prices, dependability, and solid alliances with Daihatsu and Toyota. Additionally, Perodua which prides in offering vehicles that are fuel efficient with low maintenance cost had also in recent time improved its offerings and after-sales support.

Meanwhile, sales of electric vehicles (EVs) and hybrids (HEVs) are also looking healthy as the first half of the year saw a 21.8% increase in hybrid sales to 11,722 units, while EV sales more than doubled to 10,663 units. The best selling EV during this period in Malaysia was BYD's Seal (2,062 units) and Atto 3 (1,990 units).  Honda, on the other hand, leads the hybrid space thanks to strong demand for its Civic, CR-V, and City e.HEV models.

In contrast, however, Thailand and Indonesia's automotive space are both driven by worries about inflation, high loan rates, and a weakening currency. Indonesia's auto sales plummeted 14% in the second quarter, marking the 13th straight month of YoY decreases. Consumers are cautious of growing expenses despite inflation being below 3% in 2024, after reaching roughly 5% in late 2022 and early 2023.

Similarly, Thailand's market is slumping, with second-quarter sales down 24% YoY, following a 25% drop in the first quarter. Due to low purchasing power and huge household debt, which makes up 91% of GDP, Thai banks have tightened their policies on auto loans, which has further reduced demand. Because of the continuous economic difficulties, the Federation of Thai Industries has reduced its estimate for domestic auto sales and exports in 2024 from 1.9 million to 1.7 million automobiles.

The slowdown in Thailand and Indonesia combined with Malaysia's ascent in the regional car market highlights a significant change in the dynamics of Southeast Asia's automotive sector.