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New vehicle sales in the Asia-Pacific region, including passenger vehicles, trucks and buses, increased by almost 10% to 42.2 million units in 2016, according to AsiaMotorBusiness.com based on data from 11 key markets in the region.

Sales in China expanded by 14% to over 28 million units last year, driven by small-car tax incentives and broader government economic stimulus. The sales tax discount was cut by half at the beginning of 2017, with the rate rising from 5% to 7.5%, and is scheduled to rise again at the beginning of 2018 to its normal rate of 10%. We expect the market will drift lower over the next two years unless further government intervention takes place.

New vehicle sales in India also continued to grow strongly in 2016, driven by declining interest rates and strong domestic economic growth. Full-year sales grew by 7% last year and more moderate growth is expected for 2017. Sales in South Korea remained at near record levels in 2016, helped also by low interest rates and sales tax incentives in the first half of the year. This market is forecast to weaken in the short term as domestic economic growth slows.

Vehicle sales  and forecasts* in Asia, 2014-19

* 2014-16 data are actual, 2017-19 are forecasts. Data: Industry Sources; Asia Motor Business forecasts.

South-east Asia’s largest vehicle market, Indonesia, enjoyed a moderate recovery last year, with sales rising by 4.7% to 1.061 million units - driven by new models and falling interest rates. The market is expected to grow slowly in the next few years, reflecting moderate economic growth in the country.

Sales in Thailand declined by 3.9% last year, with a weak fourth quarter more than offsetting moderate growth earlier in the year. The market is expected to resume its recovery this year as economic growth picks up. Sales in Malaysia on the other hand declined by over 13% last year on slower economic growth and just a weak rebound is expected this year.

Strong economic growth continued to lift South-east Asia’s smaller vehicle markets to new highs, including the Philippines and Vietnam. Vehicle ownership is low in these countries and low interest rates and strong domestic economic growth continue to bring new buyers into the market.

Asia Motor Business expects vehicle sales in the region to drift lower in 2017, mainly due to as slightly lower sales in China after market incentives are removed. Elsewhere, market performances are expected to be mixed, with most markets in South-east Asia expected to perform positively.

Tony Pugliese

March 2017

Asia Motor Business is an Asia-based automotive industry research and consulting company supported by a network of experienced industry analysts located across the region. The company provides research, analysis, forecasts and consulting services on the world’s emerging and developing automotive markets.

Asia-Pacific vehicle sales grow 10 % in 2016

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