After two consecutive quarters of declining sales, Malaysia’s motor vehicle industry is showing signs of a pick-up. This is good news for those looking for possible signs of an economic recovery.
Earlier this week, the Malaysian Automotive Association reported that sales in March had risen 20.5% to 44,205 units from a low point in February. The association expects further improvement in April and is sticking to its year-end total industry volume (TIV) projection of 480,00 units.
While this will be a contraction from the 548,112 units achieved in 2008 – the second best year ever – the outlook has brightened considerably for the industry.
However, from the consumer’s point of view, the latest developments in the car trade have mixed implications.
For example, the head of a Proton car dealer association was recently quoted as saying that the car loan approvals rate had gone up to about 50% in the past month from as low as 30% previously. This shows that banks are more willing to lend to car buyers.
Easier credit, however, comes at a price. The Star reported on Tuesday that banks had raised interest rates for loans to purchase non-national cars effective almost immediately.This has narrowed the gap in the rates charged for loans for non-national cars and national cars, which had previously favoured the former by about one percentage point.
Due to competition, banks do not normally advertise their car loan rates, but it is relatively easy to get the latest quotes for any brand or model by calling up hire-purchase officers at any bank branch.
The rates for loans of longer tenure (say, nine years) are a bit higher compared with those for a five-year loan. Also, different makes and models carry slightly different rates. At some banks, the rates may vary a little from branch to branch.
The one percentage point increase translates to about RM80 in extra monthly instalment for a RM100,000, seven-year loan.
Bank Negara has slashed its benchmark interest rate three times since November last year to 2% currently. The market is expecting another rate cut when the central bank’s policymakers meet next week.
The recent rate adjustments by banks “reinforce our view that hire-purchase rates are unlikely to be reduced despite lower base lending rates,’’ says AmResearch in an April 21 report.
The higher rates for non-national cars will curb demand for foreign marques such as Toyota and Nissan.
The two Japanese brands have the biggest share of the local multi-purpose vehicle (MPV) market, but their dominance is being challenged by the newly launched Proton Exora.
While sales at Proton are set to rise, other carmakers are still feeling the pinch from the economic slowdown.
Analysts believe that the domestic TIV will remain sluggish for the rest of the year as consumers hold back big-ticket purchases, while banks adhere to strict lending requirements.
But for those with cash to splurge, the current car market is probably as good as it gets. To keep the stocks moving, car dealers are likely to step up their promotional campaigns in the coming months.
Shop around for the best deals. Sales representatives are usually more than willing to help in getting the best rates, and some carmakers are offering arrangements that have lower interest rates for certain models compared with those quoted by the banks. Unsold stocks are also available at a discount to the sticker price.
If you need to trade in your vehicle, then it is imperative to visit more than one dealership for quotes. Bear in mind that as used-car prices drop, so will the trade-in value of your vehicle. The consumers’ appetite for a new car, as they say, has taken a back seat in these tough times.
A car is probably a person’s second-most expensive purchase after a home. This is true here, as the cost of owning a car in Malaysia is high. Depending on the engine capacity and origin of make, a significant portion of the showroom sticker price includes a hefty tax bill.
The car needs to be insured and the road tax paid before you can drive up to the nearest petrol station for a fill-up.
The sales tax for petrol in Malaysia is set at 58 sen per litre, but based on the international crude oil price of US$50 a barrel, it is estimated the actual collection is about 40 sen per litre at current RON 97’s pump price of RM1.80. Drivers also have to pay toll whenever they use roads built by private concessionaires.
So never mind the current hire-purchase rates and the variety of models available in the market, our choices are actually limited to the amount of cash that we can afford to pay every month.
A rule of thumb is that you should not be spending more than a third of your monthly income on car expenses.
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