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Economy

Southeast Asian auto sales make a comeback

Second straight year of growth gives makers reasons to plan long-term

A Mitsubishi Motors-affiliated dealership in Bangkok

BANGKOK The Southeast Asian auto market is set to have a second straight year of growth, thanks especially to Thailand and the Philippines, where sales have been particularly strong.

New-auto sales in six major countries in the region climbed 5% on the year to around 2.45 million units in the first nine months of 2017. The full-year tally is seen coming in at around 3.4 million units -- the highest in four years.

January-September sales in Thailand, the region's second-largest market, topped 600,000 units for the first time in three years, reaching 620,000, up 12% on the year. Consumers there had refrained from spending while in mourning for the October 2016 passing of King Bhumibol Adulyadej. With the end of the mourning period last month, consumption is now expected to pick up.

The Philippines' sales were up 15% at just over 330,000 units, ranking it fourth.

DELAYED RECOVERY The economy is growing again in Thailand with help from exports and tourism, and both the central bank and the finance ministry have upgraded their 2017 growth projections, brightening consumer and business sentiment.

Car purchases are increasing among those who benefited from an incentive program offered under the government of former Prime Minister Yingluck Shinawatra, as they are now free to switch to new vehicles. The program led to sales of a record 1.43 million units in 2012.

Vidaya Saikaew, who works at a fast food restaurant, just bought her family's first-ever auto. On Nov. 2, at the Mitsubishi Rungcharoen dealership in an industrial district in Bangkok, she drove away with her Triton pickup truck, priced at 826,000 baht ($24,900). The 26-year-old has a side business on the weekends selling clothes and plans to use the vehicle to help with deliveries.

Jakapong Chaitrakulthong, the president of an auto sales company that runs four Mitsubishi Motors-affiliated showrooms including the one above, has been holding exhibitions at nearby shopping malls and markets. This year's sales are up more than 50% compared with last year, and the company plans to hold more exhibitions toward the year-end sales season.

With the end of the mourning period, manufacturers are stepping up sales promotions, hoping to win over customers with new offerings and better services.

Mitsubishi Motors introduced a new user support service on Nov. 1, providing a five-year warranty to all models, and checkup and road services in case of an accident over that period, all for free.

Other manufactures are also taking action. Germany's Daimler on the same day showcased a new vehicle inspection site for Mercedes-Benz, seeking to cement its lead in the luxury segment. The facility, equipped with a state-of-the-art inspection system, can check 20,000 finished vehicles per year.

Japanese automakers, which control nearly 90% of the Thai market, are rolling out new vehicles. Isuzu Motors released its revamped D-Max pickup truck on Nov. 9. Mazda Motor debuted its all-new CX-5 sport utility vehicle on Nov. 13. And market leader Toyota Motor might begin selling the revamped Hilux pickup truck as early as the end of this month.

IN BEFORE TAXES In the Philippines, sales growth in July and August was particularly sharp, at around 20%. As average income levels rise in the country, demand for autos is spiking ahead of an excise tax hike.

The Philippine parliament is hashing out tax reform legislation that would increase revenues. The plans would place higher taxes on new autos as early as next January, and this is causing a spike in car sales before the year-end. Some BMW and Lexus models have seen sales increases ranging between 50% and 100% as luxury vehicles are taxed at even higher rates.

Many automakers are working to bolster Southeast Asian operations. China's Zhejiang Geely Holding Group has invested in Malaysian automaker Proton Holdings in a rescue arrangement, giving it a foothold in the region. The Vietnamese real estate company Vingroup has announced its entry into the auto business as well. Mitsubishi Motors in April opened a new plant in Indonesia. And Subaru will begin vehicle assembly in Thailand in 2019.

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