All Time High TIV - July 2018

The Malaysian automotive market continued to experience a spike as a result of "tax Holiday" recently announced by the government. July was the second month of the three months, which GST was zero rated making the OTR prices of cars much cheaper than other normal months.

The TIV for July is expected to be around 67,810 units (pending official announcement by MAA), highest in 2018 and 3,308 units or 5.1 percent higher than the previous month. All brands recorded a growth compared to same period last year. Many also did better than a month before, especially for those that started the month with higher inventory. 

The YTD TIV until end July is expected to rise to over 357,500 units, improved by 24,500 units compared to the same period 2017. This is a reflection of almost 7.4 percent growth year on year. The market has managed to register 132,312 units during the first 2 months of this Tax Holiday, or an equivalent to 37 percent contribution to the total market thus far.

"Stock is King" continued to be the denominator during this unprecedented period. Proton already announced that they did 31 percent better than June with 8,105 units registered in July, the highest in 30 months. 

Honda also hit a new record high with 12,780 registrations, up by 12 percent compared to June 2018, which also brought it back to number two position after losing it to Toyota in the previous month.

All brands are receiving an overwhelmed bookings since 1st June and now rushing to fulfil them before 31st August 2018 when Tax Holiday will end. Although, August is still within the Tax Holiday period, but as bookings are already surpassing the normal OEMs' stocks capacity, there will be customers that will receive theirs at the beginning of SST regime.  One brand already made it to the public that they will honour the "zero-rated GST" prices post August. Few others, has quietly disseminating that they will honour at half of the GST amount during its delivery in September, whilst the rest are still simulating the impact. Volume seller OEMs will have tougher time in deciding the approach as it will involve a bigger subsidy in total.

Perodua recorded a whopping 23,830 units for the month of July 2018,  4,219 units or 21.5 percent higher than June. Its July's registration has also became the monthly highest for 2018 after surpassing its 21,980 units recorded in May.

During its session with the media on 2nd August 2018, Perodua announced its 2018's 1st half performance, which includes the 17.5 percent growth in car registration. Perodua has sold 117,000 cars from January to end of June 2018, with Perodua Myvi contributed almost 41 percent and followed by Axia, Bezza and Alza at 29, 19 and 11 percents respectively. Until end June, Perodua hold a 40. 6 percent market share in Malaysia automotive market.

For me, the unexpected Tax Holiday has created a new phenomena to the industry. Public is taking full advantage of cheaper car prices market is offering. Hopefully, these 3 months superb performance by all OEMs will generate enough volume to cover the "expected slow down" from September onwards. Or, perhaps, there will be no slow down after all? Who knows?