New car sales may have dipped in May, but the situation is set to get a whole lot bleaker this month, what with showrooms nationwide closed as a result of the full movement control order (FMCO) that began on June 1 and has since been extended to June 28.
With virtually no new registrations expected this month, save the odd number of units in which car loans have already been approved pre-lockdown and a Letter of Undertaking (LoU) has already been issued, the situation is expected to mirror that of April last year, in which only 141 registrations were recorded.
The drastic halt will have a definite financial impact, as Berita Harian reports. Based on an average vehicle sales price of RM70,000 per unit, it is estimated that the country’s automotive industry is set to lose around RM3.44 billion in revenue due to the complete slump in sales this month.
While most manufacturers have introduced online purchasing platforms including e-showrooms, the constraints of the documentation process for loans and registrations will limit the number of sales transactions that will go through. In a research note to clients, Kenanga Research stated that only a few units will be able to be registered through the road transport department’s (JPJ) e-Daftar system for the purchase of vehicles, in which the loan has been agreed through a LOU.
In a brief statement to the publication, Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad echoed the belief that registrations for June will be severely limited. “If there is stock in the showroom, companies can still register with JPJ online. However, I don’t think it will involve a large amount,” she said.
Despite the lack of sales in June, Kenanga Research believes that new volume-driven launches can possibly spur sales before the year is out, further boosted by the extension of the SST exemption until the end of the year and seasonal promotions from brands. It projected a total industry volume (TIV) target of 545,000 units for the year.
This sentiment was shared by CGS-CIMB, which said it still expected that revenue for automotive sector would rebound with a 34% higher net profit growth this year, with TIV performance being stronger in the second half of the year, supported by the tax exemption.
Meanwhile, TA Securities said the implementation of an effective vaccination program bodes well for vehicle sales. It expects that sales will regain momentum as a result of the economic recovery, an accommodative interest rate environment and the launch of new models, and forecast this year’s TIV to remain at 627,000, which is 18.4% higher than last year. In January, the MAA had forecast an 8% growth in the TIV this year to 570,000 units.