Stricter hire-purchase guidelines, lower loan amounts and weakening Ringgit behind drop.
The Malaysian Automotive Association (MAA) had its 2015 wrap-up and 2016 forecast on January 21 and the numbers foreshadow a gloomy year ahead with a negligible improvement in Total Industry Volume (TIV) for 2015 against 2014 and a drop by 2.5 per cent for the 2016 forecast.
While 2015’s TIV stands at a record high of 666,674 units, the growth was a paltry 187 units, or 0.03 per cent, over 2014’s 666,487 units.
This year’s forecast will see a slight slump of 2.5 per cent over 2015 the main reasons behind the drop being the banking institutions tightening up their requirements for hire-purchase loans as well the reduction in loan amounts itself. The weakening Ringgit itself would see many buyers hold off on purchasing a new vehicle.
Datuk Aishah Ahmad, president of MAA, said that the higher downpayment requirement will be a hindrance in car sales and that the banks are also cutting down the repayment period from the maximum of nine years to seven years. She went on to add that the sales slump would be noticeable this month itself.
The 2016 estimate stands at 650,000 units, with passenger vehicles making up 575,250 units and the remaining 74,750 units consisting of commercial vehicles.
Nonetheless, the MAA point out that the 2016 approximation would mark the industry’s seventh consecutive year of breaching the 600,000 units mark.
The increasing cost of living would leave consumers with less disposable income, which in turn would see them being more selective with their spending and a new car purchase would be seen as a huge burden to undertake at this point.
Additionally, the more stringent guidelines on hire-purchase loans and the larger downpayment sum required would be a hurdle for the lower income group to purchase a vehicle.
However, the MAA also provided a forecast from 2017 till 2020 that predicts the TIV will grow year-on-year by between 2.2-3.0 per cent each year. Nonetheless, the reasoning or basis behind the growth was not revealed during the media briefing.
If the predictions are to be believed, the TIV will surpass the 700,000 units mark in 2019 and grow from there.
“In regards to the Trans-Pacific Partnership Agreement, I believe that there isn’t much to gain for the automotive industry as we currently don’t source vehicles from the North American region although suppliers ma benefit from the new markets they have access to,” said Aishah.