Rocky road ahead for commercial vehicles on uncertainties, weak ringgit

Demand for lorry and bus subsegments are forecast to be the most impacted this year


The commercial vehicles (CV) segment is heading towards a more challenging market this year due to uncertainties in infrastructure projects, bearish buyer sentiment and weakening ringgit.

Isuzu Malaysia Sdn Bhd’s CV division COO Atsunori Murata said a lower federal government’s spending on infrastructure projects and price uncertainties for major products such as commodities would likely cause the CV market to slow down in the near term.

“The government has a smaller budget on infrastructure with ongoing reviews on mega projects.

“Prices of major products such as crude and palm oil are uncertain, while property and retail market sentiments are either stable or declining in Malaysia. These factors refrain industry players from buying new CVs,” he told The Malaysian Reserve (TMR) recently.

Murata added that the market size of CVs is expected to decline to 8%, or even as low as 3%, out of the total industry volume (TIV) from a traditional 10% level, due to faltering demand and inability to keep up with passenger vehicle growth rate.

Last year, the CV segment surprised the industry as it delivered 65,512 units, up 5.7% from the 61,950 recorded in 2017.

That figure accounted for 10.9% of TIV, according to statistics by the Malaysian Automotive Association.

CV’s market share has been on a downward trend whereby it decreased gradually from 11.7% in 2014, 11.3% (2015 and 2016), 10.7% (2017) and 10.9% (2018).

Murata said the sales momentum in 2018 was partly driven by the tax-free period which would cause demand for CVs to be slightly lower this year. A similar case is expected to occur in the passenger car market, he added.

According to Murata, the demand for lorry and bus subsegments are forecast to be the most impacted this year.

In addition, he said the weaker ringgit poses a downside risk to the market and thus making it more challenging for industry players to change customers’ attitude towards price.

In contrast, JF Apex Securities Bhd analyst Nursuhaiza Hashim said the CV market is likely to grow 1.3% this year compared to 5.7% registered last year, on a softer demand.

“New launches will drive the growth though it is hard to tell which marques and segments would lead the growth story,” she told TMR.

Meanwhile, Weststar group ED Datuk Vikram Menon is cautiously optimistic on CV outlook this year despite uncertainties emerging from the US-China trade spat.

He said the industry players would also need to monitor how these scenarios would affect the local automotive market.

The group’s unit, Weststar Maxus Sdn Bhd, is expected to launch the T60 pickup truck in April.

Menon said it will be “an uphill task” to break into the segment which is dominated by Japanese brands.

Overall, he said the sales of CVs in Malaysia will increase though potential customers, particularly in the commercial vans segment, are concerned about vehicles’ service and maintenance costs. 

Last year, Isuzu — a second CV market leader after Toyota Motor Corp — posted a higher volume at 11,103 units. However, its market share contracted from 17.5% to 16.9%. 

Toyota’s market share also shrunk from 35.3% to 33.7% despite selling more CVs at 22,105 units.

In contrast, Ford’s market size increased from 9.2% to 10.2% on higher volume achieved at 6,671, mainly attributed to its new pickup Ranger sales.

Ford jumped to the third position outdoing Nissan Motor Co Ltd, which saw its market share dropped from 11.6% to 10.2%, with volume decreased to 6,654 units from 7,205.