New Market Study Published: Malaysia Autos Report Q2 2013

Fast Market Research recommends "Malaysia Autos Report Q2 2013" from Business Monitor International, now available

by Bill Thompson

(WireNews+Co) - Boston, MA - 19 March 2013

This quarter, BMI maintains its bullish 2013 vehicle production forecast, of 10%, based on our view that Malaysia can soon become a key export hub for auto production of a higher value-added nature, such as energy-efficient vehicles (EEVs). This would give the country the potential to close the gap with Indonesia and Thailand, which have overtaken it in vehicle production volume terms.

The Malaysian government is soon to unveil policies on EEVs as part of its National Automotive Policy (NAP) review, by the end of H113. According to Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed, the EEV segment has been identified as an important driver under the ongoing revised NAP, and this is the segment which the government wants to open up to foreign competition, in its gradual liberalisation of the country's auto sector.

BMI believes that Malaysia's intention to target EEVs gives it a first-mover advantage and a chance to catch up with Indonesia and Thailand, which have both overtaken the country, in automobile production. As well as the NAP, we also believe that leading carmaker Proton's new mandate by its parent company, DRB-HICOM, to produce 500,000 vehicles annually by 2018, should also provide a nice tailwind to auto production. Although 500,000 is significantly higher than Proton's current annual output of about 150,000 cars per annum, we believe that Proton will continue to increase production gradually across 2013, in a bid to increase its exports to markets such as Australia, Thailand and Indonesia.

View Full Report Details and Table of Contents (http://www.fastmr.com/prod/552353_malaysia_autos_report_q2_2013.aspx?afid=201) (http://www.fastmr.com/prod/552353_malaysia_autos_report_q2_2013.aspx?afid=201)

Although total vehicle production grew by 6.8% in 2012, this was despite some speed bumps, which the industry had to navigate. Supply constraints due to the 2011 floods in Thailand still hampered carmakers in the first half of 2012, and the imposition of tougher lending guidelines on domestic car loans by Bank Negara, also weighed in local sentiment. However, we believe as the automotive supply chain has largely normalised in Malaysia, growth can be expected to accelerate in 2013.

Looking forward, Malaysia's upcoming revised NAP, together with the arrival of the AEC in 2015, which would incentivise automakers to use Malaysia as an export hub, has made us more bullish on the country's auto sector's long-term growth potential. We now forecast Malaysian vehicle production to grow by 7.8% over the 2013-2017 period, to hit 830,000 units by 2017.

A key risk to our bullish outlook would be any delay in the implementation of the NAP and/or regulatory changes which may come about due to a change in government. Also, just the NAP revision without actual policy reforms, presents a downside risk to our production forecasts.

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