Lower TIV seen

CYBERJAYA: The Malaysia Automotive Institute (MAI) expects total industry volume (TIV) to drop as much as 3% this year following the shortage of components and spare parts due to earthquake that hit Japan in March.

Chief executive officer Madani Sahari said the disruption was likely to affect Japanese original equipment manufacturers (OEMs), which account for about 30% of total TIV.

“Those that will be heavily affected are the Japanese OEMs. We had a meeting with them a few weeks back,” he told StarBiz in an interview.

“So far, they say they have enough stock and inventories to survive on. They are monitoring it and will be able to know the situation by end-May, in June, or latest, by July.”

MAI is an agency under the International Trade and Industry Ministry that was established as the focal point and coordination centre for the development of local automotive industry.

Madani said MAI had regular meetings with local automotive players and OEMs.

“As of now, based on the current information that we have, we forecast TIV to drop by 2.5% to 3%. By July, as the Japanese players get a better evaluation of the situation, it will give us a better forecast,” said Madani.

“(But) Japanese being Japanese, I think they will find a way to resume production as soon as possible,” he added.

Total vehicle sales in Malaysia grew 13% to hit an all-time high of 605,156 units in 2010, surpassing the previous record of 552,316 units achieved in 2005.

The Malaysian Automotive Association (MAA) had forecast in January that the local automotive industry is expected to reach another all-time TIV high of 618,000 units this year but this may have already changed in light of the earthquake that hit Japan in March.

MAA usually has a media briefing in July to review the half-year TIV performance. It will also present its outlook for the remainder of the year and may or may not revise its (TIV) forecast for 2011.

Madani said national car companies Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) were unlikely to see any impact from the catastrophe that had hit Japan.

“We met with Proton and they said they were conducting a robust monitoring within (the group) and on their vendors,” he said, adding that Proton had implemented a “two-month frame” monitoring system as a counter-measure against any delay in production.

“This is so that if they have problems with components and parts, Proton will have two months to do something about it.”

Madani also cited recent news reports on Perodua stating that it expects its operations to fully recover by July. Both Proton and Perodua account for 60% of total TIV.

As only the Japanese makes were expected to be impacted, the slip in this year's TIV would be minimal, he said.

OSK Investment Research, in its recent report, said it expected a 5.1% year-on-year drop for TIV in 2011 due to the disruption caused by the Japanese earthquake.

The research house said it expected earnings in the second and third quarters for most Japanese car assemblers in Malaysia that are severely impacted by the supply disruptions to see margins being pinched with the under-capacity of plant utilisation resulting to poor economic efficiency amid high raw material prices.

Related Stories: Supply problems caused by the tsunami won't affect Japanese car demand

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