Sunday, May 15, 2011

One million total vehicle sales predicted by 2020

The Malaysian automotive total industry volume (TIV) is projected to hit one million units by 2020, according to the Malaysia Automotive Institute (MAI).

“By 2020, I think we can hit a TIV of one million,” said chief executive officer Madani Sahari, adding that the forecast was in fact a conservative one, underpinned by inevitable factors that would spur the demand for vehicles in Malaysia over the next eight to nine years.

Madani noted that from 2005 to 2010, the Malaysian TIV recorded a compounded growth of about 10%. Total vehicle sales hit an all-time high of 605,156 units in 2010 from its previous high of 552,316 units in 2005



While not expecting similar growth margins over the next decade, Madani, in his “conservative” projection, halves the expected compound growth over the next five years until 2015, then halves it further from 2016 to 2020.

 “We're being conservative. We expect a 5% growth from 2011 to 2015 and than just 2.5% from 2016 to 2020. By 2020, we expect TIV to hit 730,000 units.”

The MAI is an agency under the International Trade and Industry Ministry that was established as the focal point and coordination centre for the development of the local automotive industry.

Madani said vehicle saturation level would increase over a period of time.
“According to the latest statistics, for every 1,000 Malaysians, 340 people own a car. But in developed countries, the saturation level is above 600, meaning that for every 1,000 people, 600 to 800 people own a car.

“Malaysia, by 2020, will be a developed nation. But we won't use the 600-mark (that applies for developed countries) as a yardstick. We will be a bit more conservative and assume that for every 1,000 Malaysians, 550 people will own a car (by 2020).”

To calculate the expected vehicle saturation level by 2020, a forecast of Malaysia's population by then would also need to be factored in, said Madani.

According to the Statistics Department, the Malaysian population is expected to grow at a rate of 2.4% per annum, hitting 31.6 million by 2020.

“But we will again be conservative. Let's say the population level will hit 28 million by 2020. At that level, and with an estimated vehicle saturation level of 550 per 1,000, TIV will reach 800,000 units,” said Madani.

“So, from the angle of organic vehicle sales growth and Malaysia reaching developed nation status by 2020, we forecast TIV will range between 750,000 and 800,000 by 2020,” he added.
At this point (between 750,000 and 800,000), Madani believes that total TIV would be boosted by a further 25% from other contributing factors, namely higher disposable income and the need to replace existing cars with new vehicles with the latest technologies.

In line with the Economic Transformation Programme (ETP), he said Malaysian per capita income is expected to double by 2020.

“The current income per capita is about US$8,000 and will reach US$15,000 by 2020. This is the Government's aspiration to become a high-income nation by then. This will push up the purchasing power of Malaysians.”

Madani said that while Malaysian per capita income will double by 2020, a similar jump is not expected in terms of car prices.

“Yes, car prices do increase, but it will be very minimal. It is impossible for a car to double its price in eight years. OEMs (original equipment manufacturers) are always talking about cost competitiveness and about reducing their car prices.”

He said buyers today would want to replace their old vehicles with new cars by 2020.

“Cars on the road will get older. According to the latest statistics, we now have about 4 million cars aged 10 years and older on the road. By 2020, that will increase by more than 5 million.” Madani added that the push for new cars would be spurred by the need for vehicles with the latest technology.

He cited the National Automotive Policy, which emphasised the need to establish a clear roadmap for fuel quality towards Euro 4M standards.

“Yes, there may be delays in adopting these new standards. But it would mean cleaner fuel and engines. Like it or not, we need to replenish whatever cars we have with new cars to adapt to these standards.”

Madani also said that while the proposed mass rapid transit (MRT) will help improve public transportation in the future (especially by 2020), he reckons that this will not reduce the need for individuals to buy cars.

“The MRT system will be a boost for the Greater KL area and its work force, but what about Penang, Johor Baru, Kota Baru, Kuantan, Kuching or Kota Kinabalu? All these cities are growing.

“Families that travel to their hometown in these cities would prefer to travel by car, not take a bus or a train. The MRT will help upgrade KL but not the whole country, so car purchases will still be necessary.”
Bookmark and Share

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...