It’s a challenging time for the automotive industry in Malaysia, as the pandemic and accompanying restrictions have left their mark on new car sales in the country. Recently, the Malaysian Automotive Association (MAA) revealed that the industry lost more than RM14 billion in June and July 2021, as car factories and dealerships remained closed during that time.
According to a report by The Star, the association based its estimate using data obtained from Malaysia’s Department of Statistics, arriving at an average of RM12 billion sales per month for both new and used motor vehicles, with the exception of motorcycles.
Assuming new vehicles made up 60% of sales, the association estimated that sales losses of new vehicles for the two aforementioned months totalled RM14.4 billion. Keep in mind that this does not factor in revenue lost due to the lack of exports and sales of spare parts.
MAA president Datuk Aishah Ahmad told The Star that automotive companies have been cutting costs ever since the first movement control order was implemented in March last year. “The automotive franchise holders would not shutter their doors but car dealers who have high operating costs and cashflow issues may shut down,” she said.
However, with economic relaxations being announced just a few days ago, the association and its members are confident that the industry will be able to post a recovery over the remainder of 2021. Last month, the association revised its total industry volume estimate to 500,000 units this year, which is lower than the initial forecast of 570,000 units announced in January – the latest year-to-date total as of end-July is 256,215 units.
“Now that the sector can operate again, we will still stick to the TIV forecast of 500,000 units. The sales and service tax (SST) exemption – 100% for new locally-assembled cars and 50% for imported cars – till year-end helps because the orders are good,” Aishah said.
Several car brands in the country also shared their views on the matter, including Honda, with a spokesperson saying that the company suffered a 52% year-on-year decrease in car sales from May to July. Pointing out that restrictions cripple not just vehicle production, but also the larger supply chain, the company is adhering to standard operating procedures (SOPs) in restarting its Melaka plant and aims to fulfill orders quickly.
Datuk Nik Hamdam Nik Hassan, Naza Group automotive CEO, said its automotive business suffered a 70% drop in July. He added that the company looked to other ways to serve its customers and believes there is healthy demand in the market.
“Buying and selling can be done online these days. Even during the lockdown, our employees are still able to engage with customers remotely and virtually. However, this is only limited to certain services as customers still prefer to visit a showroom for the touch and feel experience,” said Nik Hamdam.
“When there’s an improvement in the economy, hopefully to be driven by high vaccination rates, we can expect new launches to be announced. We definitely want to take advantage of the tax holiday till year-end,” he added.
Mazda distributor Bermaz Auto said there are constraints in the supply of CKD parts, which is an issue made worse by the global chip shortage. “The sales tax holiday helps to attract customers and hopefully, we can meet the delivery schedules before the year-end,” a spokesperson said, adding that there would be an initial delay in fulfilling deliveries in the short term, as during the lockdown, assembly plants and their supporting vendors could not operate.
The shortage of chips is also an issue acknowledged by Proton and Mercedes-Benz Malaysia, which could result in delays in vehicle delivery. However, both companies are working hard to ensure customers receive their cars and have introduced new models this year to bolster their line-ups.
Meanwhile, UMW Toyota Motor president Ravindran Kurusamy said the company has an encouraging number of bookings for its models, and will resume operations rapidly to minimise the impact on its business and customers. “As of now, there is no foreseeable impact to our business,” noted, in regards to the global chip shortage.
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