EARLIER this year, US-based J.D. Power and Associates, a global marketing service provider, forecast that demand for new cars and trucks will be slower but steadier through 2015. The prophecy has proven its bite until to date.
Auto sales, which are amongst the key indicators of domestic consumption in an emerging economy, mark various outcomes in different countries and regions. However, the overall sentiment is that the industry has loosened its grip – for now.
In India, the passenger vehicle market remains on a downhill; June car sales dropped and sales for heavy duty vehicles also fell, prompting the country’s auto industry body, Society of Indian Automobile Manufacturers Association to seek Government intervention to reducing excise duty and phasing out 15-year old passenger vehicles.
Indonesia, touted as amongst Southeast Asia’s top economies, also posts a slower June auto sales growth of 2.5% year on year compared to the same period a year earlier.
According to industry data, a total of 104,265 vehicles were sold in Indonesia, a growth of 2.5% from a year ago, compared with May’s 4.2% growth.
Motorbikes take over cars in terms of sales, indicating that the shift in preference is due factors such as higher fuel prices.
Vietnam’s auto industry is bracing itself for a major impact once the Asean Free Trade Area (AFTA) abolishes auto import taxes in 2018.
The country, which has not been able to come at par in terms of price and quality of imports, is anxious at the impact of the tax cuts to the local industry. One of the worst outcomes is it becoming a large-scale auto importer in the region.
With only five years remaining for Vietnam to develop its local automotive industry to compete with the imminent auto import after 2018, time may or may not be enough.
Local industry data show that most local players are behind production targets.
Vietnam is base for a measly 210 auto parts manufacturers, which is only a fifth of Indonesia’s production base and a fifteenth of Thailand’s; and most of which produce simple and low technology output.
Meanwhile the Ministry of Industry and Trade has revised the Vietnam Automobile Development Plan, an auto industry master plan that is set to as far as 2020, to adapt to the impending scenario by 2018.
According to Tran Tuan Anh, Deputy Minister of Industry and Trade, the master plan classifies market opportunities to help producers meet the demands of market segments. In the course of modifying it, the Ministry has added three “breaking” solutions to the revised plan, including stable policies for the auto industry, producing environmentally-friendly vehicles and creating favourable conditions for car makers.
Despite the uncertainty looming ahead for the industry, auto sales in the country are increasing.
Based on report from the Vietnam Automobile Manufacturers Association (VAMA), domestic auto sales exceeded more than 49,800 units in the first half of this year, up 16% on 2012 figures. Car and truck sales grew 22% and 13% respectively, from 2012. The proposed 10-12% cut in auto registration fees could also pull up sales to 112,000 units, says VAMA.
Meanwhile, the Philippine automotive industry is realising growth of more than 17% to 102,913 units in the first seven months of 2013, from 87,374 units during the same period in 2012, according to the Chamber of Automotive Manufacturers of the Philippines, Inc. ( CAMPI) and the Truck manufacturers Association (TMA).
Passenger car sales grew 33,098 units from January to July 2013, up by 26.1 % from the previous year’s 26,244 units, reported the two groups, adding that commercial vehicle sales also hiked up by 14.2% to 69, 815 units from 61,130 units, while Asian utility vehicles (AUV) were also up by 2% to 23,670 units from 23,215 units.
Sales of other types of vehicles, including trucks are also up this year.
The local industry expects to achieve sales of 210,000 units, exceeding its initial target of 200,000.
The global auto industry upheaval sees redemption in demand for autos in the US, China and Japan gaining momentum at the start of the year.
According to reports, US vehicle sales has gone from recession-grim to confident with uptrend second quarter earnings posted by major US car makers Ford, General Motors and Chrysler.
Japan’s weaker yen has made its exports more globally competitive, benefiting likewise auto producers. Meanwhile, China’s preference for imported (and also luxury cars) may be hurting the local producers but brings in sales to overseas producers.
Based on a recent data by the China Association of Automobile Manufacturers (CAAM), German cars accounted for 26% of total car sales in the country, whereas local cars only fetched 25% of the total. Japanese and US cars clinched 18% and 16%.
EU losses and wins
Europe’s auto sector has suffered the brunt of the region’s economic crisis. Based on recent report, new car sales in June skid 5.6% to 1.134 million vehicles, compared to the same period last year.
For the first half of the year , sales dropped 6.6% to 6.205 million units. The two year consecutive decline in sales has gone on, according to report, attributing it to the Eurozone crisis.
While singling out UK as the only market in the region that has expanded its market sales by 10%; other EU countries were not spared. Germany recorded a sales drop of 8.1% between January and June, from a year earlier; France posted 11.2% drop; Spain declined in sales by 4.9%; and Italy registered a 10.3% decline.
The sales decline has gone unabated despite the carmakers’ streamlining of both prices and manufacturing capacity.
Bruised by the general lowdown situation, the auto industry is getting a doseof a good news.
The UK has penned a 10-year scheme to be joint-funded by the Government and manufacturers. Each of the party puts in £500 million to a new national engine development centre aimed at making UK a hub for research of new power train technologies to replace traditional petrol and diesel engines. The centre, which is targeted to be operational by 2014, is expected to generate 30,000 jobs and support the country’s supply chain.
The scheme is to restore UK’s auto industry’s competitive edge and pump it up with new technological advancements, especially with the advent of new generation of vehicles.
According to the Society of Motor Manufacturers and Traders, industry turnover was up 3% to £59.3 billion last year, as vehicle production reached nearly 8% to 1.58 million vehicles.
The centre, which can provide a viable solution for long-term replacement for combustion engines, is timely with emissions regulations drawn up by western governments.