The Malaysian Automotive Association (MAA) revealed today that auto sales in 2021 amounted to 508,911 units, which is 20,603 units or 4% less than in 2020. It’s the second consecutive year of decline for Malaysia’s total industry volume (TIV), but the auto club is forecasting a rebound in 2022.

MAA’s target for 2022 auto sales is 600k units, which is 91,089 units or 17.9% higher than last year’s total. The rebound will be spearheaded by passenger vehicles – MAA predicts that of the total, 540k will be PVs (up 87,337 units, +19.3%) and 60k will be commercial vehicles (up 3,752 units, +6.7%).

In coming up with the 600k forecast, MAA considered macro factors such as the post-pandemic global economy rebound and the Malaysian government’s projected GDP growth of 5.5% to 6.5% in 2022, driven primarily by an expansionary Budget 2022 and the normalisation of economic and social activities.

Consumer spending is expected to rise in tandem with the country’s economic recovery. Helping matters are continued low interest rates. At the last Monetary Policy Committee (MPC) meeting in November, Bank Negara Malaysia decided to maintain the benchmark Overnight Policy Rate (OPR) at 1.75%, and this might help to stimulate domestic spending including for big ticket items like new cars.

The sales tax exemption for passenger vehicles has been extended for the third time – it now ends on June 30, 2022 – and that will be a carrot. MAA says that its members will be ramping up production and deliveries to fulfil the order backlog; that, along with new models including electric vehicles at tax-free prices “can assist to sustain buying interest”. MAA is also expecting aggressive promotional campaigns by its members to recover market share.

Possible downsides include the continuation of pandemic-related disruption challenges and supply chain issues. Examples include a new wave of Covid-19 infections, shortage of semiconductor chips, rising cost of freight and uncertainty in Malaysia’s political arena. These may affect the country’s economic growth and in turn, the sales of new vehicles.

“However, it is unlikely these disruptions will cause major upheaval in the economy, given that much experiences that had been acquired by the authorities in handling of Covid-19 crisis over the past two years,” MAA president Datuk Aishah Ahmad said.