Industry Trend Analysis - High Rewards, Low Risk Help Singapore Top ASEAN Sales RRI - JUNE 2017


BMI View : Robust growth opportunities for new and existing entrants, high levels of urbanisation, strong consumer purchasing power and world-class road infrastructure help Singapore top the regional ranking for the ASEAN region in our Autos S ales RRI. Myanmar lags behind the rest of its regional peers hampered by weak consumer purchasing power, low vehicle ownership rates, an uncertain long-term political outlook and a high - risk operating environment.

Singapore tops the regional ranking for the Association of Southeast Asian Nations (ASEAN) region in our new Autos Sales Risk/Reward Index (RRI) with a score of 74.6 out of 100. This places the country in the top 20 highest scoring countries globally, coming in at number 14 out of the 124 countries covered in our sales RRI. This score means the country sits in the 'high rewards, low risk' sweet spot, far outperforming the regional average of 47.6. Coming in last in our ASEAN rankings is Myanmar with a score of 27.4 on our index, which places the country in the 'low rewards, high risk' quadrant, along with Cambodia, Laos and Thailand.

Singapore Leads The Pack
ASEAN - Autos Sales Risk/Reward Index
Note: Scores out of 100, higher score = more attractive market. Red point = regional average . Source: BMI Autos Sales Ris k/Reward Index

Singapore The Outperformer

Singapore's high score, both in the ASEAN region and globally, is explained by the country's strong performance across a range of rewards and risks categories in our sales index. On the rewards side, the country gets an overall score of 67.5 largely due to robust growth opportunities for new and existing entrants, high levels of urbanisation, strong consumer purchasing power and its world-class road infrastructure. Looking at the risks, Singapore has an attractive regulatory environment (a proxy for economic openness), a very stable long-term economic and political outlook and a low-risk business environment. These factors combine to make Singapore a highly attractive market for automakers to enter and operate vehicle retailing activities in the ASEAN region.

Singapore Way Ahead
Singapore & ASEAN - Risk & Reward Scores
Note: Scores out of 100, higher score = more attractive market. Source: BMI Autos Sales Risk/Reward Index

Malaysia Benefiting From Market Size And Road Infrastructure

Singapore's closest competitor in our ASEAN Autos Sales RRI is Malaysia, scoring 57.6 on our index. The country's biggest strengths lie in its highly developed new vehicle market and good quality road network, scoring 82.9 and 90.2 out of 100 respectively. Further contributing to Malaysia's second place in the ASEAN region is its stable long-term economic environment and low-risk operational risk profile, obtaining scores of 87.8 and 79.7 respectively. The country's biggest weakness lies in its poor performance for vehicle sales growth - which is based on our five-year forecast average - scoring 22.8 on our sales index ( see ' Investment And Infrastructure To Support Sales Revival ' , March 17; ' Improving Economic Fundamentals To Support Sales Recovery ' , November 14 2016).

Robust Vehicle Sales Growth Makes Philippines Attractive

In contrast to Malaysia, strong growth in vehicle sales, where the Philippines scores 97.6 on our RRI, makes the country an attractive market in the ASEAN region for carmakers to set up retailing activities. We currently forecast total vehicle sales to grow at an annual average rate of 17.9% over our 2017-2021 forecast period ( see ' Cambodia, Philippines And Vietnam To Lead ASEAN Car Sales ' , February 14).

Double Digit Growth To Continue
Philippines - Vehicle Sales, Units
f = BMI forecast. Source: AAF, BMI

The country further benefits from high vehicle ownership rates as well as low short- and long-term economic risks. Dragging the Philippines' score down in our RRI is the country's low vehicle ownership rates, weak consumer purchasing power, high rural population, poor quality road infrastructure and risky operational environment for businesses.

Myanmar Lagging Behind

Myanmar's low position on our RRI is as a result of its weak performance in both risks and rewards categories. Poor growth opportunities for new and existing automakers (reflected in our sales growth forecasts), weak consumer purchasing power, low vehicle ownership rates, an uncertain long-term political outlook and a high-risk operating environment mean Myanmar is the least attractive ASEAN market for vehicle sales activities. The country's biggest strength lies in the size of its driving age population, where it scores 80.5 on our index, highlighting the underlying potential for growth in vehicle demand in Myanmar.

Poor Scores Dragging Down Myanmar
Myanmar - Autos Sales RRI Scores
Note: Scores out of 100, higher score = more attractive market. Source: BMI Autos Sales Risk/Reward Index