Japan tsunami seen to lead to drop in M'sian car sales

KUALA LUMPUR: Sales of automobiles are poised to drop in the coming months after production in April fell by nearly a quarter as the supply problems affecting Japan-made cars have began to rub off on the local industry.

Production numbers for April released on Friday showed a drop of 24.7% from a year ago, the largest so far this year, and analysts said the massive drop was a direct consequence of the disruption of supplies after the earthquake in Japan.

“The industry will start to see a supply-led drop in car sales from next month,” said an analyst who covers auto companies on Bursa Malaysia. Sales of automobiles rose 4.4% in April.

He said the variance in average monthly production tended to be up or down 5% and such a huge decline in production was mainly caused by the Japanese marques. Toyota, Honda and Nissan all posted large falls in production in April.

“The Japanese makes generally saw a reduction in production of 40% to 50%,” he said.

Production by Proton appears to be at normal levels while that by Perodua, which still relies on Japanese components although a majority of the parts are locally sourced, has dropped drastically.

He suspects sales will dip from May up to July as a result and any signal on the resumption of production would first come from Japan.

The industry has been bracing for a drop in sales for a some time after the March earthquake and power disruption in Japan.

Some of the big auto companies in Malaysia has scaled back production drastically, with analysts saying workers at some plants are operating in a single shift.

Analysts said car companies generally kept stock of components for cars, but the buffer varies from company to company and generally was between one and three months.

The Malaysia Automotive Institute (MAI) expects total industry volume (TIV) to drop as much as 3% this year following the shortage of components from Japan.

In a report recently, its 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.

He said car companies had been monitoring their parts supplies and would only be able to know the situation by end-May, in June, or latest, by July.

“Once supplies of components are resumed, then production can easily be ramped up. The question now is when,” said another analyst who covers the sector.

Although supply disruptions might frustrate not only the car manufacturers in the country, analysts do not think consumers would be fleet of foot to wander off to another badge if they have to wait long for their vehicle.

“Consumers in Malaysia are used to waiting and doing so for one to three or even six months is something the market is used to,” said the analyst.

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