KUALA LUMPUR: Automobile sales are expected to see flat growth this year due to moderate economic growth, tighter lending rules, less disposable income and a weak ringgit.
The latest data from the Malaysian Automotive Association (MAA) on Wednesday showed total industry vehicle (TIV) grew by 3.8% to 598,714 units last year over 2017.
If not for the three months zerorised GST from June to August, vehicle sales would have risen at a much slower pace.
Also those who had already bought their vehicles during this period are not expected to make new purchases anytime soon.
For this year, the MAA forecasts a marginal 0.21% growth to 600,000 units. Weighing on consumer spending is almost flat GDP growth of 4.9% this year versus 4.8% last year.
Jobless rate was 3.3% as of November, which means almost full employment but the overall consumer mood is cautious, with the stock market being a barometer.
Major factors which will impact TIV sales are slower economic growth, lower public spending, persistent weak ringgit and a moderation in consumer spending.
The ringgit has fallen 8.7% against the US dollar over the past 12 months and it is down 9.13% against the yen.
Vehicles are seen as bigger ticket items and this could see consumers, who need to replace their cars, probably holding off their purchases or trade down to lower priced cars.
Banks have imposed stringent lending rules for hire purchase loans. Some banks are currently offering up to the maximum nine years tenure and up to 90% margin of finance and it is unlikely they will be extending the tenure or margins.
However, what could provide the spark to the auto industry are new models at very competitive prices and aggressive promotion campaigns.
The MAA forecasts TIV of 61,2000 – an increase of 2% – for 2020 and 624,850 in 2021. For 2022, it sees a 2.2% growth to 638,600 units.