Business

Thursday July 16, 2009

Motor vehicle sales not expected to improve in second half

By EUGENE MAHALINGAM


This is despite the better economic outlook, say analysts

PETALING JAYA: Motor vehicle sales in Malaysia are not expected to improve in the second half of 2009 despite the better economic outlook, say analysts.

Even with improved stability in the financial markets, new model launches, a government vehicle-scrapping policy, aggressive discounts and promotional programmes by car companies, the total industry volume (TIV) was not expected to spike soon, they said.

Research firm Frost & Sullivan said it was maintaining its earlier forecast of an 8.1% decline in TIV to 501,000 units for 2009, adding, however, that sales in the second half were expected to be better than the first half.

Kavan Mukhtyar ... ‘The market volumes will still remain in the negative terrain compared with the second half of 2008.’

“The market volumes will still remain in the ‘negative terrain’ compared with the second half of 2008. However, the decline will be lesser than the first half of the year,” Kavan Mukhtyar, the firm’s partner and Asia-Pacific automotive and transportation practice head, told StarBiz.

Among the factors that would cushion the TIV decline in the second half were the economic impact of the Government’s stimulus package (which would be more visible in the second half), improved consumer sentiment and stable interest rates, he said.

Kavan also said the multi-purpose vehicle segment was expected to see further growth towards the fourth quarter with the launch of a new model by Perodua.

“We project that the second half will see the passenger vehicle market declining by 4% to 5% compared with the almost 12% decline in the first half. For the full year, we are maintaining our original forecast of 6.8% decline for the passenger vehicle segment.

“Commercial vehicles are more closely linked to industrial growth which is suffering more due to the global economic conditions. In addition the industry is also adversely affected by reconditioned vehicles,” he said.

In its 2009 second-quarter survey on consumer confidence, independent market research agency InsightAsia Research reported that individuals started feeling “less negative” about the current state of the economy and more optimistic about the future.

An analyst from a local bank-banked brokerage said he was maintaining his initial forecast of a 15% drop in the TIV for 2009, adding that consumer confidence was unlikely to boost TIV.

“Consumer sentiment and economic conditions have improved but, for big ticket items such as vehicles, this has not picked up much,” he said, adding that the impact of the auto-scrapping scheme introduced under the second stimulus plan was “minimal so far.”

He also said most consumers would be cautious about their spending habits. “People are being prudent. As some are not even expecting any bonuses, which means cutting their festive spending which may include car purchases.”

The analyst added that the slew of car launches of late was unlikely to boost the TIV in the second half.

Since May, the new vehicles launched were 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; Nissan Sylphy Tuned by Impul; Mitsubishi Pajero Sport SUV; Mazda 3 Sport; Ford Escape SUV; Chery Tiggo SUV; Toyota Vios TRD Sportivo; BMW Z4; Volvo XC60 SUV and Ferrari California.

“These models cater more to the higher-end segment, which represents an insignificant share of the market,” he said.

The Malaysian Automotive Association has forecast a 12.4% decline in the TIV to 480,000 units for 2009. It will be announcing the half-year TIV sales later this month. The TIV for the first five months of 2009 was 203,760 units.

Kavan said the TIV for the first half was expected to decline 11% compared with the previous corresponding period. Sales volume for the first six months of 2008 surged 25.9% to 277,973 units compared with 220,739 units in the first half of 2007.


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