February 4, 2021
In recent years, Myanmar’s automobile industry has entered a period of drastic change. The number of new vehicle registrations had reached the registration climax in 2015 (including new and used vehicles) and has gradually been declining ever since. The number of vehicle registration has dropped sharply by the second half of 2018 when imports of right-hand vehicles were banned . As a result, the number of new and used cars registered has exceeded that of used cars. In other words, Myanmar’s automobile market, which had been a market centered on used cars until then, now has begun to be shifted to the new car.
In November 2020, the general election was held all over Myanmar. The ruling party NLD won an overwhelming victory, and the administration was stabilized. In the same year, Myanmar’s consumption has started to cool down, as in other countries, due to the outbreak of the newly infectious disease worldwide, known as the corona virus or the COVID-19. This pandemic has led a significant impact on those who has lost in employment, which in turn causes temporarily decline in consumer discretionary spending and behavior across the country. However, declining in consumer spending is expected to gradually recover in the mid-term and the future-term. Although there was a 3-month suspension on the vehicle registration acceptance in 2020, the number of registered vehicles still hit about that of 80% of the previous year, which shall be considered as a decent situation despite the suspension.
Nowadays, banks and non-bank financial institutions have recently partnered with auto dealers and car showroom owners to offer consumer-friendly hire-purchase plan on new cars. Consumers has started to widely purchase new cars via hire-purchase vehicle loans and about thirty to forty percent of the new vehicle purchase are bought through hire-purchase loans. The access to the loan creates an easier environment for consumers to purchase new cars, and as a result, there is an increase in buying new cars than it used to. In particular, Yangon has entered the so-called motorization period which is the willingness to purchase new cars and the ratio of registering new cars is constantly increasing, and is expected continually increase steadily in the future.
The local automobile production in Yangon has been expanding and ongoing since 2015. There is a restriction policy on issuance of Yangon registered license plates which has led to an increase in registration of license plates in its neighboring cities; Bago and Mandalay. There is a mandatory policy that a scrapped vehicle slip is required when applying a new Yangon license plate and the current market price for a slip costs 100 lakhs MMK to 110 lakhs MMK. Despite the slip costs, most car dealers in Yangon prefer to get the Yangon license plates over the other ones since vehicles with Yangon license plates are high in demand. Along with this, automobile manufacturers are entering the local production one after another in order to acquire the Yangon number. Vehicle manufacturers are trying to expand sales in Yangon, the largest consumer area. In 2021, TOYOTA plans to start local production in Yangon. It is expected that the automobile companies will continue to enter the market in the future.
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