This article first appeared in The Edge Financial Daily, on January 20, 2016.

KUALA LUMPUR: Perusahaan Otomobil Kedua Sdn Bhd (Perodua) has no plans to raise vehicle prices in the near term, despite the persistently weaker ringgit against the US dollar and yen.

“We are sensitive to and mindful of the current environment of economic slowdown, and will strive to provide affordable vehicles to our customers. For as long as we can hold it out, we will,” Perodua president and chief executive officer Datuk Dr Aminar Rashid Salleh told reporters after presenting Perodua’s 2015 Performance Review yesterday.

However, he declined to specify at what level of the ringgit will Perodua be compelled to raise prices.

Meanwhile, Perodua saw its bottom line decline between 25% and 30% last year, compared to 2014.

“It was due to two factors: the decline of the ringgit against [the] US dollar and yen, currencies that Perodua mainly deals with, and smaller margins from the sales of lower variants of our products, despite higher sales volume,” said Aminar, adding that 8% to 10% of Perodua’s components are imported.

At the end of trading hours yesterday, the ringgit was trading at 4.3647 against the US dollar (compared with 3.5715 a year ago), and at 3.7056 against the yen (compared with 3.0379 a year ago). A weaker ringgit translates into costlier vehicle and component imports.

Although the consensus view is that 2016 will be another tough year for most carmakers, Perodua is “cautiously optimistic” that it can achieve its targeted sales of 216,000 units, up 1.27% from the 213,300 units it achieved in 2015.

“People still need to change their cars, even in a difficult economic environment. We believe many would ‘buy down’ — purchasing a lower priced vehicle — and this will fuel continued demand for affordable cars. We still have models that can ride out the difficult times,” Aminar explained.

He cited the Axia model, which had an outstanding order of 10,000 units thus far. Axia accounted for 46.7% of Perodua’s entire sales for 2015, which came in 9% higher than 195,600 units in 2014, backed by strong demand for Axia, Myvi and Alza models.

Perodua’s capital expenditure (capex) for 2016, meanwhile, is 9% lower at RM370 million, compared with RM408 million in 2015.

“Capex has an impact on cash flows and we want to preserve our cash as best we can in a difficult environment. Having said that, we will continue investing in our current plants and aftersales service,” said Aminar.