Flat growth for auto sector

  • Business
  • Wednesday, 15 Jan 2020

PETALING JAYA: Frost & Sullivan expects flat growth for the local automotive sector in 2020, as ongoing global headwinds and repeated postponement of the National Automative Policy (NAP) may create uncertainty and affect consumer sentiment.

According to Frost & Sullivan mobility senior vice-president and associate partner Vivek Vaidya, vehicle sales are projected to grow 1% to 608,790 units this year.

“We expect marginal growth in total industrial volume (TIV) for this year, underpinned by new car launches and stable political atmosphere, ” he told a briefing yesterday.

He said new models that offer smart connectivity features such as remote vehicle access through smartphone apps would get higher consumer interest and will induce purchase.

Vivek noted that the industry is expecting the NAP to provide clear direction to transform itself in a new decade.

The NAP, which was supposed to be announced in the first quarter of 2019, has been delayed to this year.

“There is an urgent need for the Malaysian automotive industry to modernise itself and offer exciting products and services in line with the global trends, ” said Vivek.

On the proposed restructuring of auto duty rates on locally assembled vehicles, Vivek said any modification to the tax structure will have an impact on vehicle sales.

“We don’t know whether it will go up or down, but we do think that the government will endeavour to reduce car prices to ease the burden on the public. However, any change to the existing tax structure will have an impact on TIV. A tax increase will spur the market, while a drop will impact sales, ” he said.

Earlier this week, StarBiz reported that completely-knocked-down (CKD) vehicles may cost more following the potential restructuring of auto duty rates by the government.

With the excise duty gazette released on Dec 31, CKD vehicles will most likely be liable to pay more taxes, adding that any impact to the sector was being analysed, according to the report.

Based on earlier reports, Finance Minister Lim Guan Eng had said that the Finance Ministry and International Trade and Industry Ministry were in discussions to restructure car import duties, with a joint committee studying the matter.

Separately, Vivek said the TIV is projected to grow 1% in 2019 on the back of strong performance of new model launches in the sports utility vehicle segment, notably the Proton X70.

Although consumers were cautious throughout the year, there was an upsurge in vehicle sales due to year-end promotions.

The Malaysian Automotive Association (MAA) will announce last year’s official TIV figures later this month.

At its biannual media conference in July last year, the association maintained its 600,000 units TIV forecast for 2019, in light of the economic uncertainties.

MAA president Datuk Aishah Ahmad said consumers and businesses were expected to remain cautious going into the second half of 2019, adding that this would only spur aggressive promotional campaigns by local car companies.

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