Automotive sector in higher gear in 2023 with TIV set to hit all-time high


File pic - AZHAR MAHFOF/The Star

KUALA LUMPUR: Malaysia’s automotive industry picked up speed in 2023, bolstered by robust sales for new motor vehicles, efforts to ramp up the usage of electric and energy-efficient vehicles as well as higher technology investments in line with the government’s net zero carbon emission goals.

Analysts and industry experts believed this total industry volume (TIV) for this year would surpass last year’s, marking the second consecutive year of achieving an all-time high.

Key growth drivers this year included the fulfilment of bookings received during the Short-Term Economic Recovery Plan (Penjana) sales tax exemption period last year and aggressive campaign sales mainly by the national car producers, leading to sustained demand and a high volume of order backlog.

The resilient domestic economy in the first half of 2023 (1H 2023), new model launches and improved industry supply chain environment also helped boost sales of new motor vehicles.

Strong 2023 TIV

According to the Malaysian Automotive Association (MAA), sales of new motor vehicles grew strongly in 1H 2023, with TIV rising by 10.3 per cent to 366,037 units from 331,746 units in 1H 2022.

The national auto makers’ sales amounted to 220,702 units, representing a 19 per cent hike year-on-year.

During 1H 2023, the industry's total production volume rose 14 per cent to 362,535 units compared with 317,933 units in the same period last year.

Year-to-date sales volume as of October 2023 rose by 12 per cent to 646,840 units compared with 578,917 units recorded in the previous year’s corresponding period.

MAA president Mohd Shamsor Mohd Zain said the recovery in the local automotive industry has been going strong in the last two years, with TIV exceeding the pre-Covid levels.

He said favourable incentives introduced by the government during the early days of the post-pandemic recovery jump-started automobile demand.

The strong momentum is expected to remain in November and December, and this year’s TIV will likely exceed last year’s all-time high of 720,658 units.

"2023’s TIV will be another all-time record for the local automotive industry. It will also be the second consecutive time the annual TIV exceeds the 700,000-unit mark,” he told Bernama.

Investments and Expansions

Automotive can be regarded as one of the country’s prominent and busiest industries in 2023, as reflected by the numerous government policy introductions, new multi-billion-ringgit investment injections from both local and foreign investors, as well as aggressive business expansions.

The government has rolled out the New Industrial Master Plan 2030 (NIMP 2030) to transform Malaysia into a high-tech industrialised nation with high-growth industries such as electronics, chemicals, and automotive manufacturing at the forefront of the RM95 billion long-term strategic plan.

The government has identified the electric vehicle (EV) sector as a high-impact sub-sector under NIMP 2030, and policies related to the sector will be reviewed every few months to support its growth.

As for the private sector, Prime Minister Datuk Seri Anwar Ibrahim revealed in July that Chinese automaker Zhejiang Geely Holding Group Co Ltd (Geely) will invest a whopping US$10 billion (RM46.7 billion) to turn Tanjung Malim in Perak into the region’s largest auto city.

Following this, DRB-Hicom Bhd has entered into a master collaboration agreement with Geely to execute the Automotive High-Technology Valley (AHTV) development in Tanjung Malim.

"The AHTV’s focus will not only be on the production of automobiles of various makers but also the manufacture of high-technology components and parts for the new energy vehicles.

"This will further expand the capability of local vendors towards specialising in high-technology manufacturing,” DRB-Hicom said.

Meanwhile, Bernama had on Aug 24 broken the news that Sime Darby Bhd would acquire a 61.2 per cent stake in UMW Holdings Bhd from Permodalan Nasional Bhd for RM3.57 billion in cash to further scale up and strengthen its presence in the Malaysian automotive sector.

The transaction, one of the largest merger and acquisition deals in Malaysia, will strategically transform Sime Darby into a leading automotive player in the country with the addition of high-volume mass-market brands, Toyota and Perodua, capturing up to 60 per cent of domestic automotive TIV.

Huge EV Potential

With Malaysia being a major electrical and electronics manufacturing hub in Southeast Asia, automakers and automotive investors here can seamlessly leverage this capacity to secure their supply chains for growing their production of next-generation vehicles, EVs and energy-efficient vehicles.

The government is aggressively promoting a conducive EV ecosystem in Malaysia, ramping up efforts to expand and enhance the country’s EV charging infrastructure.

Putrajaya said it is targeting to have 10,000 EV charging stations in place by 2025. As of Nov 1, a total of 1,246 charging stations have been installed nationwide.

In 2023, the local industry has seen the emergence of new players, especially in the EV market, such as world-renowned automotive brands Tesla from the United States as well as BYD and Neta from China, creating greater competition in the local market.

On Oct 2, Tesla Malaysia officially opened its headquarters in Cyberjaya to provide an all-in-one customer experience.

Mohd Shamsor said the entry of these new brands has added greater excitement to the market, spurring more interest among consumers, naturally providing more choices and better overall services amid increasing competitiveness.

The number of registered EVs grew to over 3,400 units in 2022 and surpassed 7,500 units in September 2023, compared with an average of 300 units in the prior years.

BMI, a Fitch Solutions company, projected Malaysia's EV sales to quadruple this year, although the EV penetration rate in the country would stand at a mere 1.8 per cent.

ICE to Remain Prevalent

According to MAA, the volume of EVs sold in Malaysia is still very small, as around 10,000 units of EV will likely be registered this year (including sales of MAA members and non-members), constituting less than 2.0 per cent of the annual TIV.

Mohd Shamsor said although the global EV market is tapering in growth as economies reevaluate their net zero journey, internal combustion engine (ICE) vehicles will stay prevalent and relevant for longer in Malaysia.

He said in countries like Malaysia, where the EV charging infrastructure is still in its infancy and the energy mix is being generated from traditional and non-renewable sources, ICE will remain the more affordable and pragmatic option for the next few years.

"As an industry, we continue to remain vigilant and ready for the ‘what-is-next’ (scenario) to ensure that Malaysians have the most viable, affordable and practical choices in terms of green technologies.

"One such example is hybrid electric vehicles (HEV) as an immediate stepping stone to contribute to and support the realisation of net zero carbon emission goals for the country,” he said.

According to Mohd Shamsor, a step-by-step approach starting from HEV is the ideal way to phase out the existing conventional ICE vehicles.

As the first step towards mass usage of electrified vehicles, HEV will bridge the gap between ICE and EV to attain quicker carbon neutrality for the country, he added. - Bernama

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Automotive , MAA , Mohd Shamsor Mohd Zain , EV , Geely , DRB-Hicom , AHTV

   

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