Business

Wednesday June 8, 2011

Car market remains vibrant and demand still strong

Behind the News by Thomas Huong


DESPITE the supply woes faced by Japanese vehicle marques after the earthquake and tsunami in Japan in March, the outlook for the automotive sector still looks bright.

Demand for new passenger cars remained strong in the first four months of 2011.

The Malaysian Automotive Association (MAA) reported sales of 187,880 passenger cars (a 6.3% year-on-year growth) from January to April this year.

Automotive analysts say the higher sales volume was driven partly by the introduction of upgraded and new models such as the Proton Inspira and Ford Fiesta, increased marketing efforts from carmakers, promotion packages with free vehicle maintenance and extended warranties, and subsidised or low hire-purchase interest rates.

For example, the 1.6-litre Peugeot 308 Turbo presently comes with a low interest rate of 1.88% (priced at RM118,888 on the road), while Volkswagen models such as the the 1.4-litre Golf TSI are offered with five-year warranty and unlimited mileage packages.

“This could also be due to car buyers anticipating the likelihood of another interest rate hike later this year,” said an analyst from AmResearch.

This was underlined by the record sales enjoyed by European and premium passenger car marques in the country from January till April this year.

Naza Group unit Nasim Sdn Bhd, the official distributor of Peugeot brand in Malaysia, claimed the top spot among European marques for the first time, with sales of 2,052 units in the first four months of this year (compared with 712 units sold in the same period last year). This was due to high demand for its Peugeot 308 models, 207 sedan and 3008 SUV (sports-utility vehicle).

Volkswagen Group Malaysia also enjoyed record sales of about 1,600 units in the first four months of 2011 compared with 359 units in the same period last year.

This was the company's best year-to-date sales performance since it was set up five years ago.

Volkswagen Group's top sellers are the 1.4-litre Golf TSI and 2.0-litre Golf GTI, and the 1.2-litre Volkswagen Polo TSI.

Meanwhile, Mercedes-Benz Malaysia saw sales of 1,710 units, led by strong demand for its E-Class and C-Class saloons.

BMW Malaysia sold 1,672 units (including MINI cars), with its top seller being the 5 Series, followed by the 3 Series.

Lexus Malaysia, a division of UMW Toyota Motor, should be satisfied with sales of 279 units as at the end of April (compared with 168 units in the same period last year).

An automotive analyst with a local research firm said the significantly higher sales of European and premium passenger cars was due to positive consumer sentiment as “businesses are doing well”.

Japanese car marques also recorded satisfying year-on-year sales growth, with UMW Toyota Motor notching up a 2.7% expansion, Honda Malaysia (8.2%) and local Nissan vehicle distributor Edaran Tan Chong Motor (13.4%).

Proton Holdings Bhd must be happy with the sales of 58,108 units, or a 13% year-on-year sales growth, in the first four months of this year, fuelled by demand for its Saga, Persona, Exora and Inspira models.

This has resulted in the national automaker closing the distance on its rival Perusahaan Otomobil Kedua Sdn Bhd (Perodua), which strangely enough, saw a 6.6% year-on-year dip in sales to 59,440 units in the first four months of this year.

Automotive analysts have attributed the drop in Perodua's sales to car buyers holding back as they waited for the launch of the new Myvi, which is scheduled for June 16.

Still, it might take a while for Perodua to reap significant earnings from the new Myvi, according to an AmResearch report issued yesterday.

The report said based on the research firm's ground checks, only between 500 and 1,000 units of the new Myvi will be available upon launch due to shortage of parts, particularly electronics used as engine and gearbox components.

“We gather that bookings placed today for the new Myvi will only see deliveries in August, just before the Hari Raya Aidilfitri festivities which means a wait of over two months,” said the report.

However, supply hitches of car parts should not continue to plague Japanese automakers for long.

UMW Toyota Motor Sdn Bhd announced last month that vehicle production at its Assembly Services Sdn Bhd plant in Shah Alam had resumed two-shift operations as parts supply from Japan stabilised.

Honda Malaysia also said recently that production at its Alor Gajah plant in Malacca would resume full output with two shifts beginning Aug 1.

The plant will increase its production by operating additional hours on weekdays and Saturdays.

This month, Honda Malaysia have also resumed the taking of new bookings for its Insight hybrid model after stopping customer orders in mid-April.

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