After announcing a new record total industry volume (TIV) of 720,658 units in 2022, the Malaysian Automotive Association has chosen to be bearish with its forecast for 2023. At a media briefing today, the association said it is expecting this year’s TIV to hit 650,000 units, which is 70,568 units or 9.8% less than what was recorded for 2022.

Breaking down TIV into passenger and commercial vehicles, the association’s forecast placed the former at 585,000 units this year, representing a decrease of 56,773 units or 8.8%. Naturally, the same is also true for commercial vehicles, which is expected to see sales decline by 13,885 units or 17.6% to 65,000 units in 2023.

The associated cited a few reasons for its forecast, including an expected drop in global economic growth this year. It said the International Monetary Fund (IMF) had projected global economic growth would slow from 3.2% in 2022 to 2.7% in 2023, which has sparked concerns of a recession, although the Malaysian economy is expected to expand by 4-5%.

Additionally, car companies are still rushing to deliver backlogged orders exempted from sales tax before the registration deadline of March 31, 2023. This, the association said, might drive sales upwards in the passenger vehicles category in the first quarter of 2023. Nonetheless, it expects the introduction of new models, including electric vehicles (EVs), will help entice and sustain buying interest among consumers.

However, there are still hurdles, including the ongoing supply chain issues experienced by carmakers as well as the possible resurgence of Covid-19 cases worldwide that can heavily impact the country. This isn’t helped by the fact that Bank Negara Malaysia raised its overnight policy rate (OPR) several times last year to the current 2.75%, which could dampen consumer confidence and their ability to secure car loans.