Business

Tuesday September 18, 2012

Slowdown in car sales

By EUGENE MAHALINGAM
eugenicz@thestar.com.my


MAA says buyers are expecting goodies in Budget 2013 for the sector

PETALING JAYA: Consumers are postponing car purchases because of several factors including expectations of goodies in the upcoming budget for the auto sector.

“The indication is that some people are holding back their purchasers,” said Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad.

She confirmed that the association's members have recorded a slight decline in sales.

“Orders have slowed down a bit. We believe that people expect something will be announced at the budget,” said Aishah, adding that the MAA did not expect any significant announcement in Budget 2013 pertaining to the local auto sector.

Budget 2013 will be tabled on Sept 28. For the first six months of 2012, total vehicle sales rose marginally by 1.4% to 301,224 units from 297,203 units a year earlier.

An industry observer says people are holding back their purchases and adopting a ‘wait-and-see’ approach An industry observer says people are holding back their purchases and adopting a ‘wait-and-see’ approach

The MAA has forecast total industry volume to hit 615,000 units for this year - which, if achieved, would be a new record for the country.

One industry observer said sales could be slowing down due to the uncertainty on the date of the general election.

“People are holding back their purchases and adopting a wait-and-see' approach.

“We believe people are also holding back their purchases following reports that the revised NAP will include a policy to address the gradual reduction of car prices in the country,” he said.

According to media reports, the policy is expected to outline a structure to gradually reduce car prices by between 15% and 20% over the next three to four years.

RHB Research Institute, in its recent report, noted that the quantum of the price reduction, should it happen, could have “major implications” for both the used and new car markets over the transition period.

“Accordingly, the Government will need to communicate its proposals to the market in an effective and transparent manner to avoid irrational behaviour by market participants and undue volatility in auto sales,” it said.

An analyst from a local bank-backed brokerage said it was difficult to determine if the vehicle sales slowdown was due to buyers holding back their purchasers until after the elections.

“Tough to say. But realistically most people would know that whatever the Opposition has in mind is a populist move and implementation would be very difficult.”

Proton Edar Dealers Association Malaysia president Armin Baniaz Pahamin also admitted that its members had been reporting a slowdown in sales.

“Sales are slowing down. Whether or not it's due to the general election is uncertain, but the market is a bit cold,” he said, adding that sales are generally slower towards the end of the year.

He said uncertainty surrounding the general election, budget and NAP had a collective impact on buyer sentiment.

“All these factors are affecting consumer sentiment,” Armin said.

He added that the uncertainty was also affecting vehicle manufacturers.

Federation of Motor and Credit Companies Association of Malaysia president Datuk Tony Khor, meanwhile, said it was still “business as usual” for the used cars sector.

“So far, there has not been much changes in terms of sales trend,” he said.

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