Singapore Autos Report Q4 2009

New vehicle registrations dropped by 9% in 2008 as a whole to 121,266 units, but according to industry representatives, the tally could have been much lower. The rate of decline will very likely be considerably more pronounced for 2009 as a whole. Sales for 2009 got off to a poor start, down by 12% for Q109, compared to the same period last year. There was then a dramatic further worsening in Q209, which translated into a y-o-y fall in new car registrations for H109 of 20.7%, according to statistics compiled by the Motor Traders’ Association of Singapore. The severe deterioration in sales volumes/ new vehicle registrations has exceeded expectations, especially given a fiscal stuimulus package unveiled by Singapore’s authorities and the offering of incentives by dealerships to clear stockpiled inventories.

Against this backdrop, we have revised our forecasts for 2009. We now expect new vehicle registrations in Singapore to contract by 17.1% y-o-y for 2009 as a whole, to a total annual volume of 100,530, compared to our earlier expectation that new vehicle registrations would fall by 14.5% y-o-y for the year.

We have also revised down our forecast for 2010, given that we expect only a very shallow economic recovery in the city state next year. Earlier, we had anticipated that new vehicle registrations in Singapore in 2010 would rise by 10.3% y-o-y (in part due to expectations of stronger economic growth, and in part due to the low base of sales provided by both 2008 and 2009). Our revised forecast for new vehicle registrations in 2010 is for a rise of 4.0% y-o-y, to a total of 104,551 registrations. The base effect should kick in more strongly from 2011 onwards, alongside a gradual acceleration in economic growth to respectable levels for a developed state across the period 2011-2013.

Risks to our forecasts for 2010 are to both the upside and the downside. On the upside, a more rapid than expected global economic recovery would likely see new vehicle registrations rise in Singapore more quickly than the 4.0% y-o-y that we currently forecast for that year. However, on the downside, if key economies around the world – particularly destinations for Singapore’s exports – remain mired in recession next year, then it will be another year of recession for Singapore, which would likely translate into another year of contracting new vehicle sales/registrations in the city state. The risk of a prolonged global economic downturn also applies to 2011 onward, meaning that risks to our current forecast of double digit % annual growth in new vehicle registrations across 2011-2013 are largely to the downside.

The rankings of the top three sellers – Toyota Motor/Lexus, Honda and Hyundai – remain unchanged in H109, compared to Q109, for overall new vehicle registrations. Kia Motors is in fourth place and Nissan sits in fifth place.