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Malaysia Tire Market Booming, But Can Environmental Norms Play Spoilsport?

Growing vehicle sales and production is a source of comfort for operators in the Malaysia tire market, but will strict environmental norms prove killjoy? TechSci investigates…

Malaysia tire market is one of the fastest growing tire markets in the world. Given the large population, rising living standards and increasing vehicle proliferation, major tire manufacturers are turning their attention to the country nestled in the Malay peninsula. TechSci Research experts provide the key takeaways pertaining to the Malaysia tire market.

Malaysia Tire Market: More Cars = More Tires

Malaysia has seen an explosive growth in the number of cars that it puts out on the roads every year. Over the past 10 years, number of new passenger cars and commercial vehicles being put on the road easily number over half a million.

Since 2010, when 537 thousand cars were put on the road, no year have the Malaysian authorities registered under 600 thousand vehicles.  Only in 2016, the figure was 580 thousand. These statistics betray the immense potential in Malaysia tire market.

TechSci Research report “Malaysia Tire Market Forecast & Opportunities, 2012 – 2022” also states that vehicle production in Malaysia is surging, from 1.11 million units in 2012 to 1.16 million units in 2016.

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Description generated with very high confidence Increase in vehicle production too, will have a significant impact on Malaysia tire market products. And significant increase in vehicle production will see a proportionate rise in the number of tires being sold annually in the country.

In addition to their indigenous automobile companies, such as Proton, Perodua, Naza etc. major players such as Ford, Nissan, Volvo have also set up shop in the country. Therefore, Malaysia tire market benefits from both internal sales and the production of vehicles in this regard.

Sustainability and the Malaysia Tire Market

Over the past few years, Malaysia has increasingly been targeting a shift towards energy efficient vehicles to combat the spectre of global warming. This shift culminated in the NAP 2014 document which places a major focus on the production of Energy Efficient Vehicles, or EEVs within Malaysia, with the goal of making Malaysia a regional hub for EEVs and its related technology by 2020.

Such a policy can have a major impact on Malaysia tire market, though it remains to be seen whether the impact is for the better or for the worse.

NAP 2014 document states EEVs are not limited to electric vehicles alone, but any vehicle that meets a set standard of fuel consumption and carbon emission level. Therefore, there is tangible potential here for Malaysia tire market, if things pan out as predicted.

A variety of EEV certified passenger cars are already plying on Malaysian roads; these include the Honda Civic, Volvo XC90, Renault Zoe, Haval M4 amongst others. Promotion of these cars through incentives and subsidies by the government will definitely surge the demand for Malaysia tire market.

However, the alternate case to be made is that stricter norms would adversely impact car production and sales, which would further impact the Malaysia tire market in a negative manner.

Obviously, more data is needed to see what sort of an effect the institution of stricter environmental norms would have on the Malaysia tire market, but it is a fact that for now, the country has to be seen in the light of its potential, which is immense.

Malaysia Tire Market from a Global Perspective

TechSci Research report Global Tire Market Forecast & Opportunities, 2022” states that there has been a bit of a slowdown in the global tire market, given that global demand is still somewhat depressed due to prevalent market conditions. Given the realities of the situation, manufacturers are assessing the best options available to them, vis a vis market growth.

The APAC region, and Malaysia tire market, in particular, has stood to gain from the change in market strategy. The APAC region is one of the, if not the most densely populated region in the world, and Malaysia with a population of around 31 million, is a key contributor.

On top of this, assortment of other factors such as rate of capital investment, increasing skill level, improving services, cheap labour etc. make APAC region a leading producer of vehicles, in addition to a fast-growing consumer.

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There has been a tremendous amount of hype being built around the untapped potential of India and the slowly realizing potential of China, and, as the two most populous countries in the world, the hype is justified to a certain extent. But people tend to underestimate the value of countries such as Singapore, Vietnam, Malaysia tire market etc.

TechSci expects the global tire market to surpass $ 319 billion by 2022 on account of anticipated rise in vehicle sales and expanding vehicle fleet, especially in APAC, during the forecast period. The region accounts for more than 60% of the tire manufacturing plants due to ample rubber production, low labour cost and favourable government policies.

Global Tire Market: The Way Forward

TechSci Research article “How Strong is the Chinese Stranglehold on Global Tire Market?” tries to divine the future of the APAC hegemony vis a vis the global tire market. World Bank pegged the growth of East Asia and Pacific region at 6.3% in 2016, well above the global GDP growth rate of 2.3%. Vietnam and Thailand were singled out for their exceptional performance by the same report, which doesn’t even factor in the Indian GDP, third largest in real terms and growing at over 7% consistently.

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Such growth has to be viewed in the backdrop of an economic pivot to South East Asia region, which can, as is being seen in Malaysia tire market, provide a sustainable ecosystem of its own.

Given that the significance of petrodollars is already in the decline, the global dampening experienced due to falling energy prices will eventually be factored into the global economy and energy will adjust to a new, and lower position in the global economic hierarchy.

Such corrections are important for markets like the Malaysia tire market. Because, once the market correction takes place, the automobile sector will witness renewed growth given the low fuel prices and also a secular decline in select raw material prices for tires.

It is early days, but it remains to be seen whether the benefits of low oil prices will be bigger than the cost of slow growth patterns that low oil prices will inevitably shift some emerging markets to. Meanwhile, TechSci will continue to monitor interesting markets, such as the Malaysia tire markets, and see how the theory about low oil prices being bad for the economy hold up.

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Relevant Reports

Malaysia Tire Market By Vehicle Type (Passenger Car, Two-Wheeler, Light Commercial Vehicles, Medium & Heavy Commercial Vehicles & OTR Vehicles), By Demand Category (OEM vs. Replacement), By Radial vs. Bias, By Company, Competition Forecast & Opportunities,

Automotive | Apr, 2021

Rising demand for passenger car tires due to growing vehicle fleet coupled with increasing consumers’ disposable income is anticipated to drive the Malaysia tire market through 2026.

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