The affordable people movers and lifestyle oriented pick-up trucks are muscling in on the turf of the sedans and hatchbacks.
The market share of passenger cars has been on a gradual downtrend over the past five years though it received a slight boost in 2011 thanks to the updated Proton Sagas, the FL and FLX, and the all new Perodua Myvi.
As the market stabilised and initial market excitement over the two new products wither away, the downtrend is expected to continue.
Migration from the passenger cars to MPVs started in a big way when Toyota introduced the Unser in the late 90s and the even more affordable people mover, the Avanza, in 2004.
The introduction of the Perodua Alza and Proton Exora in late 2009 further enlarged the MPV segment. By 2010, the first full year sales of both the Alza and Exora, the MPV segment grew by 50 per cent from the previous year, accounting for 18 per cent of all vehicles sold in Malaysia.
Between 2009 and 2010, Perodua Myvi sales dropped by 14 per cent, while the overall car market went on to register a record high of 605,155 units sold in 2010, an increase of 13 per cent.
Perodua as whole registered an increase of 13 per cent in sales. However, Perodua did not really increase its overall sales by a substantial margin, as the people who bought the Alza were mainly those who would otherwise have bought a Myvi. This is what the industry would term as cannibalisation.
The case of the Myvi and Alza, both the best selling models in their respective segments, is in itself a strong indicator of the general future direction of the Malaysian car market.
Passenger car buyers are not just starting to abandon traditional sedans in favour of MPVS. Pick-up trucks and SUVs are also seeing strong growth, although in less significant numbers compared to MPVs.
Ford was the pioneer in this ?lifestyle truck? segment, trucks that don?t look too out of place in a typical upper-middle class urban setting.
The Ford Courier was the first product to take advantage of a revised motor vehicle regulation that allowed pick-up trucks to be registered for private use and to be taxed lower than SUVs.
Its replacement, the iconic yellow liveried Ranger Splash became the most affordable non-national car in the market. An automatic transmission Mitsubishi Storm further broadened the appeal of trucks to urbanites.
And then the ?Johnny-come-lately? IMV platform Toyota Hilux arrived in 2005 and mowed down the competition.
Before the advent of lifestyle trucks, SUVs like the Mitsubishi Pajero and Toyota Land Cruiser were the favourite choice of entrepreneurs and travelling businessmen. A revised tax structure in the mid-2000s placed SUVs on a significantly higher tax bracket and killed the segment overnight.
A new crop of lifestyle dual-purpose trucks filled the gap. Case in point was the Toyota Hilux, which took over the role previously handled by the Toyota Land Cruiser. Since the tax revision, the SUV segment?s market share has been hovering at around 5 per cent.
However, in 2011, with stronger marketing and the introduction of good-looking models by Korean manufacturers, the SUV segment went past the 7 per cent mark.
A new crop of ?soft-roaders?, eschewing the heavy but rarely used 4WD drivetrain in favour of more economical 2WD drivetrain while retaining all the plus points of owning an SUV like the Mitsubishi ASX, Peugeot 3008 and Hyundai Tucson 2.0, drew in new group of consumers who would otherwise not have considered an SUV.
Over five years ago, private buyers can only choose between a Honda CR-V and a Nissan X-Trail.
Today, there are 11 models from nine different brands to choose from, excluding the more utilitarian truck-based SUVs like the Toyota Fortuner and Mitsubishi Pajero Sport.
The move from sedans to MPVs and SUVs is an expected path of growth for any maturing automotive market. The same trend has been observed in developed markets like Europe, Japan and Australia.
And in these markets, the small sedan segment has almost disappeared completely, replaced by compact SUVs and economical hatchbacks.
SUV segment
This is a segment traditionally dominated by the Honda CR-V. However, the disruption in production of Honda vehicles at the Ayutthaya plant due to floods in Thailand last saw the model?s market share dropping to its lowest.
Three brands made significant gains last year, two of them were Korean.. With an updated Santa Fe and all new Tucson, Hyundai nearly doubled its market share between 2010 and 2011, making it the fastest rising brand in the segment.
January 2012?s sales figures show Hyundai?s Tucson is now the best selling SUV in the country. The 2WD Tuscon 2.0 is the best selling variant, which also suggests that consumers are now able to accept a 2WD SUV.
Kia gained five per cent of the market share last year, thanks to a new range of strong products ? the Sorento XM and the all-new Sportage. The introduction of a cheaper, more economical-to-operate 2WD Mitsubishi Pajero Sport and the compact crossover ASX also drew in new buyers to Mitsubishi, which had three per cent of the market share.
Nissan?s new X-Trail could not replicate the success of its predecessor, with a market share of less than half of the previous X-Trail.
Toyota?s figure is inclusive of the Toyota Rush. Some choose to consider the seven-seater 4x2 Toyota Avanza-derived Rush as an MPV. Either definition is debatable but since UMW Toyota marketed the Rush as an SUV, we shall group the Rush as an SUV.
If the same seven-seater 4x2 drivetrain criteria is adopted across the board then both the seven-seater 4x2 Chevrolet Captiva and Mitsubishi Pajero Sport 4x2 cannot be categorised as an SUV.
MPV segment
The MPV segment has been dominated by Toyota since 1998 when the company introduced the Unser. Even when Nissan introduced a more refined passenger car-based Grand Livina in late 2007, Toyota continued to hold its ground with the aging Avanza.
It was only when the national makes Proton and Perodua decided to enter the MPV segment that Toyota decided to import the second generation Avanza from Indonesia rather than manufacturing it at the plant of UMW?s partner, Perodua Manufacturing.
Being a low priced product, the Avanza competes in a very price sensitive segment and the majority of buyers from this income group will go with cheaper alternatives from Proton and Perodua.
Thr bulk of the MPV sales, over 85 per cent, is concentrated below the RM100,000 price bracket. Competition from cheap re-conditioned or parallel imported models make manufacturers reluctant to introduce a better class MPV.
Interestingly, Mazda sells more of the higher priced RM191,928 Mazda 8 than the RM150,019 Mazda 5 although this is partly due to a tighter supply for the Mazda 5.
Pick-up truck segment
This is one of the most conservative private user segments in Malaysia.
The fact that the Hilux, the oldest (seven years and counting) model in the market, with power output and specifications that is poorer compared to nearly all its competitors, continues to dominate the segment with such a huge margin says a lot about the psychographics of a typical truck buyer.
Toyota?s Hilux controls 50 per cent of the pick-up segment. It?s next nearest competitor, Mitsubishi, is at a far away 19 per cent.
This is one segment where having a reputation for reliability and durability is far more important than having one more cog in the transmission or more fancy electronic gadgetry.
Commenting on the pick-up segment outlook for 2012, Ismet Suki, president of UMW Toyota Motor Sdn Bhd, said, ?The Hilux is a legend among pick-up trucks. Over generations, it has become a symbol of strength and resilience.
?It excels in the harshest of environment, and supplementing its strong off-road foundation with a sleek modern styling and a refined demeanor, the metropolis is also its habitat.?
But to look at the pick-up truck segment at an overall country level does not tell the full story.
This segment is unique in that there is a marked distinction between Peninsular Malaysia and East Malaysia.
The reason for this distinction is due to the different road tax structure for 4x4 vehicles in East Malaysia. A one-year road tax for the 3.0-litre Toyota Hilux costs RM 1,611 in the peninsular, RM43 in Sarawak and RM266 in Sabah.
Unsurprisingly, it is the larger engine variant truck models that sell in greater numbers in Sabah. Both the Hilux 3.0G, D-Max 3.0 consistently outsell their smaller and cheaper 2.5-litre brethrens.
The softer looking, more refined Mitsubishi Triton is clearly aimed at urbanites in Peninsular Malaysia, where Mitsubishi is the second largest selling pick-up truck brand with a 25 per cent market share, ahead of Isuzu, Nissan and Ford.
However, the picture is very different in Sabah where Isuzu rules, accounting for over 28 per cent of the market share. Ford also boasts of a stronger showing in East Malaysia compared to Peninsular Malaysia.
What?s ahead?
With no significant new MPV model launches for the year, pick-up truck and SUV sales are likely to be strong.
Commenting on the MPV segment, Dato? Dr Ang Bon Beng, executive director of Edaran Tan Chong Motor Sdn Bhd, said, ?For 2011, the MPV segment saw a contraction in segment share ? it captured 15 per cent of TIV compared to 17 per cent in 2010. This is due to some model aging effect and no attractive new models introduced.
?This year, there will be some exciting B-segment and C-segment model launches which will affect the MPV segment share by 2-3 per cent. Even though we foresee some new MPV launches, these will target the upper middle and luxury market.?
He added, ?As customer appetite for the Grand Livina is still strong, we are confident it will continue to dominate the MPV segment and maintain its status as the best-selling non-national MPV.?
On the truck market, Ismet said, ?The pick-up segment will continue to grow and is expected to be yet another exciting and challenging year for the Malaysian economy.
?UMW Toyota Motor is planning a few exciting new and improved model launches and the Hilux is one of it in the pipeline. Toyota is targeting a 14 per cent increase in sales of the Hilux.?
Hyundai is the current force to be reckoned in the SUV segment.
Lau Yit Mun , managing director of Hyundai-Sime Darby Motors, said, ?The SUV market is expected to continue its expansion due to the current changing lifestyle of people and the new looks of SUVs.
?In the past, the SUVs were more utility focused. However, today?s more sophisticated SUVs are not only good looking with very attractive styling but interior comfort compares to a luxurious sedan. ?Our SUV sales target is about the same as in 2011, that is, around 3,000 units.?
The Thai-made Chevrolet Trailblazer, which was introduced in March last year, is an SUV derivative of the Colorado pick-up and will be exported to the region, including Malaysia.
In Thailand, the Trailblazer, being a pick-up derived vehicle, is taxed at a lower 18 per cent (30 per cent and above for passenger car-based SUVs) and will be slotted below the Captiva.
Other SUV model launches expected this year is the all-new Honda CR-V by middle of the year and an all-new Hyundai Santa Fe by the end of the year.
Within the truck segment, the Chevrolet Colorado and the all-new Ford Ranger are expected to make their Malaysian debut within the first half of this year while market leader Toyota Hilux will receive one final round of update before the model bows out for its next generation replacement, sometime around 2014.
Ford Ranger Wildtrak
The new generation Isuzu D-Max, which went on sale in Thailand late last year, should be arriving in Malaysia this year.
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