KUALA LUMPUR, Aug. 21 (Xinhua) -- The BMI research house said on Monday that it has revised up its forecast of Malaysian vehicle sales growth to 3.8 percent for 2023.
The research house said in a note that the revision is compared to the previous forecast of a 9-percent decline in Malaysia's total car sales.
The main reason behind the renewed forecast is the much better-than-anticipated pent-up demand for vehicles purchased during the sales tax exemption period.
It said the sales tax exemption lapsed on June 30 last year, but there was a grace exemption period that lasted up to March 31 this year for those cars which have been booked for purchase before the end of the sales tax exemption period.
It also noted that a backlog in orders materialized following supply chain disruptions which meant automakers could not fulfill orders.
"We note that we had previously expected demand to taper off in Q2 2023, however, data compiled by the Malaysian Automotive Association (MAA) shows that demand remained elevated all throughout the first half," it said.
According to the MAA, vehicle sales rose by 12.6 percent year-on-year in the first seven months of 2023 to reach 429,807 units versus 381,680 units over the same period in 2022.
Meanwhile, the BMI believes demand for electric vehicles (EVs) will far outstrip that for internal combustion engine (ICE) cars within its 2023-2032 forecast period.
"We currently forecast total EV sales to quadruple in 2023, although the country's EV penetration rate will sit at just 1.8 percent," said the research house.
Although the growth rate for the Malaysian EV market is significant, it noted that it falls behind that of 2022.
It opined that the slowdown in growth terms is reasonable since growth rates tend to recede as volumes rise.
Looking ahead, the BMI remains cautious on Malaysia's vehicle market in 2024 to 2025, as high base effects could derail the record sales volumes posted in 2022 and expected in 2023.
This could lead to a weaker sales environment beginning in 2024 as high base effects kick in, according to the research house.
It has therefore revised its 2024 and 2025 forecasts lower in light of the upward revision in 2023 vehicle sales.
It has previously expected sales in 2024 and 2025 to rise by 3.3 percent and 3 percent, respectively, and now it expects sales to grow by a modest 1 percent in 2024, but to contract by 0.5 percent in 2025 as the local auto market faces some difficulties and slows down.
"That said, we believe that vehicle demand will remain at elevated levels as Malaysian consumers benefit from structurally high economic growth levels, a dynamic economy that is attracting investments in high-tech sectors such as the semiconductor manufacturing space, and generally high-income levels as Malaysia inches closer to high-income status," it said. ■
