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Southeast Asia's new car sales up for second straight year

Thailand and Philippines drove growth, but 2018 sales may weaken

Automakers show off their latest models for Southeast Asian consumers at the exhibition in the outskirt of Bangkok last November. (Photo by Hiroshi Kotani)

BANGKOK -- New-car sales in six major Southeast Asian nations rose 5% on the year to about 3.36 million units in 2017, as the region's auto market recovered to its best level in four years. Thailand and the Philippines propelled the region to a second straight year of growth last year, but it fell short of the 2013 record by 200,000 cars.

Southeast Asia's population is growing and increasingly motorized. Indonesia, Thailand, Malaysia, the Philippines, Vietnam and Singapore comprise one of the world's most promising car markets, ranking one notch below Germany, the fifth largest. Japan's Toyota Motor is the region's top automaker.

The six countries' aggregate sales declined from 2014 to 2015 -- after Thai consumers rushed to buy new cars before the so-called first car buyer incentive scheme expired -- but bounced back in 2016.

The Thai market shrank for four straight years until 2016, but jumped 13% last year to 870,000 vehicles, as the country concluded the mourning period for King Bhumibol Adulyadej. Ford Motor of the U.S. saw particularly strong growth of nearly 40%, as sales of its Ranger pickup truck soared. Demand for Isuzu Motors' mainstay pickup truck was also robust, with sales climbing 12%.

Sales in the Philippines expanded 18%, as consumers purchased new cars before a looming tax hike. Nissan Motor's sales there surged 48%, while Honda Motor's climbed 37%. Ford's sales increased just 9%.

But 2018 estimates for the region's three largest markets predict only modest growth. Sales for Indonesia and Malaysia are each expected to edge up 2% to 1.1 million and 590,000 units, respectively. Thailand's car sales are only expected to expand 3% to 900,000 vehicles. The Philippines may also slow down, as the rush to buy new cars before the tax hike wanes.

Thailand is also expected to be impacted by currency fluctuations. "Agriculture sector will be hurt by further appreciation of the baht," said Morikazu Chokki, CEO of Mitsubishi Motors' Thai unit, on Wednesday. The currency, which is trading at its strongest level against the dollar in four years, could hurt the country's economy by reducing agricultural exports, endangering new-car sales.

Automakers are trying to spark new consumption by releasing fresh models. Nissan unveiled the Datsun Cross, under its low-cost brand for emerging countries, in Indonesia on Jan. 18. It will be marketed to young consumers and families at a starting price of 163 million rupiah ($12,117). Jose Roman, a managing director at Nissan, believes the car gives the automaker an edge over rivals. A joint venture between General Motors of the U.S. and China's SAIC Motor will also sell its multi-purpose vehicles in Indonesia under its Wuling brand.

Meanwhile, in Thailand, top-seller Toyota plans to release the C-HR for the country's nascent small-sized sports utility vehicle market, where Honda's HR-V and Mazda Motor's CX-3 already have strong footholds. The automaker hopes the car will popularize hybrids there as well.

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