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Manufacturers to face intense competition

exteriorCAR prices are going to get very competitive in the short term at least, as manufacturers and distributors react to a sluggish market that is expected to cause a contraction in sales volumes this year, a research firm says.

RHB Research Institute was reported in the Utusan Malaysia on Monday as saying that manufacturers were being compelled to maintain their respective market shares due to the emergence of new vehicle models.

RHB said that the move by companies to offer higher discounts was driven by slower car sales observed during the second half of 2014.

Potential customers were also delaying their purchase of new cars because of the rising costs of living.

RHB said that the automotive industry’s performance in the second half of last year was not as satisfactory as the overall sales made in the first half to June.

Based on the industry’s performance in the past 11 months, the total industry volume (TIV) for 2014 is not expected to reach its target of 680,000. The Malaysian Automotive Association’s  initial projection for 2014′s TIV was 670,000 units.

RHB also expects TIV in 2015 to slump to 650,000 vehicles compared to 675,000 in 2014 and 655,793 in 2013.

Maybank Investment Bank Research, on the other hand, is maintaining its ‘neutral’ outlook on the domestic automotive sector and expects TIV for 2015 to reach 660,000 vehicles, The Sun newspaper reported.

“We expect the TIV growth of the first half of 2015 to contract between three to five percent on-year to 320,000 against a high base in the first half of 2014, before catching up in the second half of this year to meet our target of 660,000 units,” its analyst Ivan Yap said.

“This is in view that consumers will tighten their belts and adopt a wait-and-see approach as they brace for higher costs of living and uncertainties to car prices from the GST implementation in April.”

Maybank is favouring Perodua, as it believes that the newly-launched Axia, which got 62,000 units in bookings and 26,000 in deliveries since mid-September 2014 is a game-changer, timely for potential down-trading by consumers.

Some of the models that will be launched this year include the Mazda CX-3, Honda City Hybrid, Honda HR-V Mazda 2, Mazda 3, Peugeot 308, Toyota Camry Hybrid, Honda Vezel, Ford Mustang, Hyundai Sonata, Kia Sorento and Nissan Almera FL.

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