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Malaysia Autos Report Q1 2011
Business Monitor International, Nov 2010, Pages: 40
The Malaysia Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's automotive industry.
By the end of October 2010 total vehicle sales in Malaysia had risen 14% to 505,546 units, prompting to us raise our forecast again to total vehicle sales of 618,958 units, up 15% y-o-y. The strong sales performance has had a knock-on effect for production, which grew 21% in the 10-month period to meet the extra demand. As the country's export base is relatively small, it is domestic demand fuelling the sector and underlining BMI's view that markets with strong domestic demand will outperform export oriented markets. We have also revised our forecast for passenger car production to 536,402 units, up 20%, and our commercial vehicle output projection has been raised to 47,339 units, up 12%, taking our forecast for total vehicle output to 583,741 units.
There are signs that Malaysia's auto sector is becoming more open to foreign participation, which BMI believes will be beneficial for the industry's development in the long run. Malaysia's Ministry of International Trade and Industry (MITI) has confirmed it is considering applications from five foreign carmakers to set up local production operations in the country, which should create more competition in the industry. This would be continuing a trend for investment this year, after France's Peugeot announced plans to make Malaysia its regional hub for ASEAN markets.
While BMI also considers the development of a strong supplier segment to be pivotal in building a regional production hub, a meeting between Malaysian government officials and Australian parts suppliers is another positive sign. A number of the suppliers are taking part in the Federation of Automotive Products Manufacturers Malaysia event in November and are particularly keen on working with local firms in the field of fuel efficient vehicles. In addition to supporting Malaysian firms, the Australian companies will also use the country as a gateway to other ASEAN markets.
Opening up Malaysia's auto industry further to foreign brands should be a positive development. BMI believes the government is aware that the industry needs focussed attention if it is to compete with its regional neighbours, particularly Indonesia, which is comparable in size but has previously been more open in its policies towards international involvement in the industry. This has contributed to Malaysia ranking ninth in BMI's Industry Risk/Reward Ratings for the Autos sector in Asia Pacific with a rating of 52.6 from a possible 100 as there is room for improvement in terms of the country's regulatory environment.
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