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Monday, November 5, 2007

M'sia motor trade feels pinch of slow sales

Business Times Singapore (2/11/2007): Those blacklisted can apply, read the motor advertisement. No down-payment or guarantor, 100 per cent loan for nine years.

Such is the current lull in motor sales since the peak in 2005 when a record 551,000 vehicles were sold, that car salesmen are led to extreme measures.

With less than two months left to meet annual sales targets, consumers are king. In one offer, until the end of the year or while stocks last, Volvo Malaysia is including a free navigation system plus parking assistance camera package valued at RM15,000 (S$6,500) with the purchase of selected Volvo models.

The future is uncertain, even though June did mark a turning point for new vehicle sales. Sales in that month rose 8.2 per cent year-on-year after six months of contraction blamed mainly on the National Auto Policy which cut excise rates and depressed second hand car prices.

Bar one or two motor stocks, analysts continue to recommend their clients to be underweight the sector. Stockbroking firm Hwang- DBSVickers believes next year would be another 'pedestrian' year, with minimal growth of 2 per cent y-o-y to 475,554 units.

August sales saw an improvement of 6 per cent over July, owing mainly to a 7.5 to 35 per cent salary increase for civil servants, along with the introduction of some new models.

But up to September's three-quarter point of the year, only 358,234 vehicles had been sold, representing a 7 per cent contraction y-o-y. The Malaysian Motor Association expects total industry volume this year to shrink by 5 per cent.

However, not everyone is feeling the pinch. For one, the luxury car segment has bucked the downtrend, registering an unmistakable uptrend throughout the year. BMW, Volvo and Mercedes Benz chalked gains, and in September both BMW and Volvo registered double digit growth.

Honda and Toyota have also more than held their own, especially in the compact segment. In October, Honda provided a facelift for its City models, and Toyota updated the Vios, although demand for their older versions was still strong. Toyota remains the non-national car market leader with 16 per cent overall market share.

Other new mass models are driving sales. Proton's latest 1.6 litre model Pesona has led to four times as many bookings and while not enough to salvage its fortunes, the national car company is receiving orders for 16,000 units a month versus 4,500 previously.

Perodua, the second national car company, is also enjoying brisk sales. The new market leader in terms of new car sales - 34 per cent of the overall market and 60 per cent of the national market - its sub-compact Viva and MyVi are selling at a rate of 6,000 and 7,000 units respectively.

Escalating global oil prices is likely to have an impact locally, with buyers likely to turn to small to mid-sized cars in greater numbers.

The sales of Hyundai, the object of the advertisement above, appears to have more than halved from 12,784 units in 2005 to 5,413 units in 2006. Upon inquiry, its dealer Kah Bintang revealed such favourable car loans were only extended to civil servants.

Kah Bintang had teamed up with a state cooperative which will make automatic monthly deductions from the salary of a government employee buying the car.

As such there was little financing risk and the co-op would not be checking lists of those blacklisted.


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