Business

Monday June 29, 2009

Non-national car players undeterred by higher HP interest rates

By EUGENE MAHALINGAM


PETALING JAYA: With the current global economic downturn and the recent hike in the interest rate on hire-purchase (HP) loans for non-national vehicles, it seems like the odds are stacked against the non-national car players.

However, the slew of (non-national) vehicle launches in the past couple of months seems to indicate that the car companies are anything but deterred.

OSK Research motor analyst Ahmad Maghfur Usman said launching new models allowed motor players to continue building market share, which was vital during an economic slump.

“Those who are cash strapped with no new models would be losing market share,” he told StarBiz.

Among the vehicles that have been introduced since May are the Porsche Cayman and Boxster; Chery A520 sedan; Chevrolet Captiva sports utility vehicle (SUV); Audi Q5 SUV; Alfa Romeo GT Blackline coupe, Brera coupe and Spider cabriolet; Mitsubishi Pajero Sport SUV; Mazda 3 Sport; Ford Escape SUV; Chery Tiggo SUV; Toyota Vios TRD Sportivo; BMW Z4 and the Volvo XC60 SUV.

Affin Securities analyst Chong Lee Len concurred that car players needed to launch new models to at least maintain market share, adding that the introduction of new or facelift models was part of the company’s “replacement cycle.”

“The decision to introduce new models is conceptualised three years earlier regardless of market conditions,” she said.

Volvo Car Malaysia Sdn Bhd president Robert Norrman said the decision to introduce its Volvo XC60 SUV was decided two years ago, adding that the model received good response ahead of its launch on June 26.

“Reception has been fantastic. We have had more than a dozen orders even before the launch,” he said.

UMW Toyota Motor Sdn Bhd president Kuah Kock Heng said he was upbeat about the demand for its Vios TRD Sportivo which was aimed at the young and “young at heart.”

“The Vios TRD Sportivo will replace the Vios S variant. Sales of the Vios S had been encouraging, indicating a market demand for sporty-looking cars. This demand can be attributed to our growing youthful population,” he said.

Kuah added that despite the increase in interest rates, the company was able to offer “attractive packages” to its customers.

HP interest rates for new non-national cars increased in April by about one percentage point to 3.25% for loan tenures of five years and below, 3.4% for six to seven years and 3.5% for eight- to nine-year loans.

According to the Malaysian Automotive Association’s May vehicle sales report earlier this month, sales of non-national makes declined 5.4% from April as a result of the interest rate hike, while that of national makes increased 16.6%.

OSK’s Ahmad Maghfur said he expected the interest rate increase to have a short-term impact on the sales of non-national car companies. “Non-nationals are losing out for now but we think this is a knee-jerk effect of the higher HP rates.”

However, despite the dip in demand for non-national makes, Honda Malaysia Sdn Bhd announced last week that it still registered better sales of its vehicles, selling 17,313 units (a growth of 29%) during the five months ended May 31 versus the same period last year.

The company also said it had gained the number one spot in the non-national passenger car segment, underpinned by brisk sales of its new Honda City, which was launched in December 2008.

Among its units sold this year, 51% comprised the Honda City, 17% Honda Civic, 15% Honda Accord and 9% Honda CR-V.


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