Myanmar auto market to reach 95,300 units by 2019

Myanmar’s automotive market is likely to grow to 95,300 units by 2010, a compound annual growth rate (CAGR) of 7.8 per cent (2013-2019). That’s the view of researchers at Frost & Sullivan who suggest that this will be driven by a growing economy, infrastructure development and increasing income as well as better integration with ASEAN nations. Their view is that real growth however is likely to start only after 2014.

“However, factors such as unpredictable regulatory changes, high car prices, under-developed auto service market and inadequate road infrastructure might hinder the potential growth,” said Frost & Sullivan associate director, Automotive Practice Asia Pacific, Dushyant Sinha. 

After decades of military control and closed door policies, Myanmar has gradually opened up its economy to foreign trade and investment. Significant developments could be witnessed in 2012, particularly the endorsement of the long anticipated foreign investment law. Besides, the banking, finance and insurance sectors have also undergone various reforms as a part of the government’s efforts to improve business environment. 

“A young labour force with a high two-wheeler ownership promises a potential car buying group in the long term,” Sinha continued. “Myanmar is highly dependent on two-wheelers, accounting for more than 80 per cent of the market while passenger cars represent 11 per cent. Meanwhile, trucks and buses only make up 3 per cent and 1 per cent respectively“.

Burma’s parts sector

Most parts and components are imported from China and Thailand for assembly activities, as the few locally-produced parts available have very low added value. Completely knocked-down (CKD) parts used for assembly require a license for import, which expires after every three months. 

“Only new parts are allowed to be imported into Myanmar,” explained Sinha. “There is no restriction on imports of new parts based on the Control of Imports and Exports Act. Despite the import ban for used parts, they are smuggled into Myanmar because genuine parts are highly priced and scarcely available,” he added. 

Japanese brands are expected to continue dominating the passenger vehicle market even in 2019, with Honda, Suzuki and Nissan gaining popularity thanks to their small car offerings (such as Honda Fit/Brio, Suzuki Swift, and Nissan March) which would appeal to Myanmar customers.

Chinese and Korean brands will also see growth due to their more affordable prices and smaller engine sizes compared to their Japanese counterparts. However, U.S. and European presence will remain at minimum level since after sale service support, especially spare parts, are still very limited.

Myanmar’s automotive market has to face a number of challenges, such as an underdeveloped aftermarket sector, inadequate road infrastructure and unpredictable regulatory changes,” Sinha concluded.