Auto sector likely to soften
Published on: Monday, December 22, 2014
KUALA LUMPUR: Automotive players are expected to introduce new and enhanced versions of existing models next year, including energy-efficient vehicles (EEVs) at very competitive prices.However, uncertainties over the impact of the Goods and Services Tax (GST), rising living costs and bleak global economic outlook may cause consumers to be careful with their spending, and players expect the sector to soften in the first half of next year.Proton Holdings Bhd Chief Executive Officer (CEO) Datuk Abdul Harith Abdullah said Proton sees a lot of potential in providing models in their respective segments, citing the recently launched Proton Iriz.ADVERTISEMENT However, he said, Proton is also cautious and mindful of the market outlook for 2015 with the impending introduction of the GST. "Customers are taking a step back to wait and see what holds for them after the GST due to the many announcements on reduction of car prices, which isn't true," he said. The current weakening of the ringgit against major currencies may not help either, as imports become more expensive resulting in higher car prices, he said, adding the first half of 2015 could be very soft.Next year, besides continuing to focus on its compact Iriz model, the company will be in the midst of developing other models, he said. "Sales are anticipated to grow as demand for affordable cars increases. ADVERTISEMENT "The Iriz is doing very well currently and the introduction of the Suprima S Standard reflects our commitment in meeting customers' demand for better value-for-money and affordable cars," he added.Second national car maker Perusahaan Otomobil Kedua Sdn Bhd (Perodua) also foresees 2015 as a challenging year, with its president and chief executive officer Datuk Aminar Rashid Salleh expressing hope for a slightly better year than 2014.
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"One reason is the momentum from the energy-efficient Axia is still there, and while the Myvi and Alza would also be drivers for 2015, we will ensure many other surprises."The overwhelming response to the Axia is due to the model's launch profile status, which is likely to be extended to next year, but once it reaches stabilisation point, the Myvi and Alza are there to support sales," he said.Sales of the Axia, which have hit 62,000 since its launch in August, will help Perodua's sales to exceed 195,000 units for 2014.For 2015, Aminar Rashid said the company could focus on after-sales services to bring back some lost customers and increase retention rate.Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said the industry may experience slow growth in the early part of next year.On the implementation of the GST, car companies may have to deal with some issues during the migration phase while some potential buyers will take a wait-and-see attitude. "Total industry volume (TIV) for 2014 may settle at 660,000 units, a one per cent growth, as compared to 2013's 655,793 units."For 2015, it could be similar to 2014, or it could be flat growth, but it's too early to predict," she said, adding the weak ringgit could put pressure on some players. The association may need to revise its earlier forecasts of 693,500 units for 2015, 708,000 units for 2016, 723,700 units for 2017 and 740,400 for 2018, she said."Consumers are expected to continue to face difficulties in getting hire purchase (HP) loans next year, and I hope banks will be more lenient in processing the loans," she said, noting that stricter HP loan requirements have led to 50 per cent of applications being rejected.However, she pointed out, lower fuel pump prices on the back of softening global crude oil prices could help the industry.Malaysian Automotive Institute (MAI) CEO Mohamad Madani Sahari, on the other hand, said he believes the implementation of the GST should stimulate demand for vehicles by reducing prices with the abolishment of the Sales and Services Tax (SST)."Some consumers will wait and see while others will not. I think this is a natural process. "It's a free market and consumers have every right to choose what they want. More and more, market forces will determine the way forward," he said.Madani said the situation is being closely monitored by the original equipment manufacturers (OEMs), who would adjust their marketing plans accordingly."In a way, it benefits the consumers," he said. On the weak ringgit, Madani said the institute is currently undertaking a study on its long-term effects, especially on the supply chain.Stay up-to-date by following Daily Express’s Telegram channel.
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"Generally, there is mixed reaction. The domestic automotive industry uses both the US dollar and Japanese yen for their international transactions."While the ringgit depreciates against the US dollar, it appreciates against the yen," he said. –Bernama