KUALA LUMPUR (Sept 26): At least three carmakers — Honda, Toyota and Mitsubishi — are expected to increase prices any time now, with some looking to do so as early as Oct 1, according to The Edge weekly in its latest edition.

The Edge’s Jose Barrock and Izatun Shari wrote that other brands such as Hyundai are said to have already raised the prices of their models, including for the Santa Fe and Elantra.

The weekly in its cover story said that second national car manufacturer, Perusahaan Otomobil Kedua Sdn Bhd (Perodua) — the market leader with a 31% market share — said earlier this month that it might increase prices as a buffer against the rising exchange rate.

The Edge said the price hikes come at a time when the automotive industry is grappling with a weakening ringgit, dampened economic conditions and the implementation of the Goods and Services Tax (GST) in April — all of which adversely affected sales.

It quoted Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad as saying that price hikes were not necessarily the way to go.

“Increasing prices is not going to help boost sales. On the contrary, it will worsen the situation as consumers are already tightening their belts due to inflationary pressures. However, there is a limit as to how much of the costs car companies can afford to absorb due to forex losses. It (increasing prices) is not an easy decision to make, and each company will have to evaluate its own situation,” The Edge quoted her as saying.

The magazine further cited an industry executive as saying that local players fork out euros for European cars and US dollars for all other makes.

The Edge said it does not help that the US dollar had strengthened considerably, resulting in the ringgit losing close to a quarter of its value against the greenback since the beginning of the year.

The ringgit tested  4.40 to the US dollar last Friday  — the lowest level since 1998.

Likewise, the ringgit has shed about 15% against the euro since the beginning of the year, trading at 4.88 last Friday.

In a nutshell, the cost of doing business has increased, impacting those who deal with fully imported completely built-up units as well as completely knocked down units with very low local content. With rising costs, bottom lines generally take a beating, said The Edge.

For more on the direction of the local automotiove sector, read the latest Edge edition for the week of Sept 28 to Oct 4 available now at newstands.

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