Malaysia Overtakes Thailand To Become 2nd Biggest Market In Southeast Asia

In surprising news, we’ve just learned that Malaysia has overtaken Thailand to become Southeast Asia’s 2nd largest car market, just behind Indonesia. The Japanese online publication Nikkei Asia reported this news after compiling automobile sales information from industry associations in the Philippines, Vietnam, Malaysia, Thailand, and Indonesia.

Malaysia used to be the third-biggest automobile market in Southeast Asia, but as the country recorded higher than normal sales through the first quarter of 2024, Malaysia enjoyed three straight quarters with larger car sales than Thailand.

For the record, the biggest-selling cars in Malaysia are the Toyota Veloz, Perodua Bezza, Perodua Alza, Perodua Axia, and Honda City.

The total industry volume (TIV) of automobile sales in the nation increased to 202,245 units in Q1 this year, up 5% over the same time in 2023, according to the Malaysian Automotive Association (MAA). In 2023, there will be an additional 11% growth, reaching a new high of 799,731 units.

The Malaysian government’s 2020–2022 sales tax reductions for cars made domestically are one of the factors contributing to the increase in automotive sales. The national automakers with the largest share of the market, Proton and Perodua, profited the most from the tax exemption.

Toyota also performed well in showroom traffic with the Bios being the most popular model among customers. “I think both the internal combustion engine and hybrid car segments for Toyota will continue to do well,” says Kuala Lumpur-based Toyota sales representative Ivan Khoo.

In contrast, Thailand has seen a sharp decline in car sales. Up until the end of Q1, Thailand had held the second spot in SEA rankings, but the kingdom suffered a 25% drop in sales to see it fall to the No 3 ranking.

Beginning in June 2023, Thailand’s monthly auto sales have decreased year over year. This is a result of both overall sluggish spending and an increase in nonperforming auto loans. However, the arrival of Chinese automakers has increased the proportion of EVs in the kingdom’s vehicle sales.

Not everything is looking up in Indonesia either, where car sales dropped by 24% in the first quarter of 2024 compared to 2023. Rising borrowing rates are to blame for this, as they deterred consumers from buying cars.

Just slightly over a million cars were sold in Indonesia in 2023, a decrease of 4% from 2022 and 30,000 from 2019, the year before the pandemic.

Car sales in Vietnam decreased by 16% in Q1 2024 compared to Q1 2023 thanks to sluggish exports and other issues which caused the country’s internal economy to remain stagnant since 2023.

Conversely, the Philippines experienced the most growth among the five countries, with sales rising by 13% in the first quarter. Solid consumer spending helped to offset inflation, which had decreased to about 4% in late 2023.

Notwithstanding the increase in sales, the MAA projects a 7.5% decline in TIV in Malaysia by 2024 as a result of a number of issues, such as customers’ worries about the rationalisation of targeted subsidies, the country’s high cost of living, and increasing service tax rates for auto maintenance and repairs. In spite of this, sales of hybrid and battery electric cars are predicted to increase. 10,159 BEVs were sold in Malaysia in 2023 alone—nearly four times as many as in 2022.


So why is Malaysia doing so well? The local automotive industry is becoming increasingly competitive due to the influx of carmakers, particularly those from China. Thanks to Malaysia’s rapidly expanding middle class, macroeconomic factors and subsidies are anticipated to have a significant impact on automobile sales in our market.

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