KUALA LUMPUR: Frost & Sullivan GIC Malaysia Sdn Bhd expects vehicle sales in Malaysia this year to be higher than last year’s target of 580,000 units, mainly in expectation of an economic recovery.
Speaking at a media briefing yesterday, Frost & Sullivan’s automotive and transportation unit vice- president Vivek Vaidya said the research outfit foresees vehicle sales rising to 586,200 units in 2017.
The Malaysian Automotive Association is scheduled to release its 2016 full-year vehicle sales figures today. As at November 2016, the total industry volume (TIV) stood at 515,293 units.
“With the expected stabilisation of crude oil prices this year, Malaysia’s economy is expected to recover from the market slowdown that it witnessed in 2015 and 2016,” said Vivek.
“We expect the ringgit to stabilise, which is something that will trickle down and bring stability to prices of imported vehicles and components. [This in turn] will lower car prices, increase purchasing power and drive sales of passenger vehicles,” he said.
The automotive sector was in its prime time between 2010 and 2015 when total vehicle sales remained healthy within the 600,000 and 666,675 bracket.
“Last year was a really bad year for the automotive industry. The economic slowdown, along with stringent lending rules, led to lower consumer sentiment. In between, the depreciation of the ringgit and market instability impacted the flow of investments into the sector,” Vivek said.
On the bright side, however, Bank Negara Malaysia’s move in cutting the overnight policy rate or borrowing costs from 3.25% to 3% in July 2016 helped bring down interest rates for hire purchase (HP) loans.
This, Vivek said, along with new model launches, aggressive promotional campaigns and discounts by car companies, would help steer the industry towards greater sales growth this year.
“The industry can begin leaving the bad times behind now. Still, it is best to remain cautious about the future as the TIV this year would largely depend on how the economy and ringgit perform,” Vivek said.
Nonetheless, stricter HP loan approval criteria and continuation of the open approved permit policy remain as the Achilles’ heels, according to Frost & Sullivan.