KUALA LUMPUR, Dec 22 (Bernama) - The auto industry that somewhat skidded this year on weak consumer sentiment and the ringgit, needs to gear up for a more challenging open market as a result of various trade agreements still on the table.
It was certainly a bumpy ride for the industry, with Total Industry Volume (TIV) for the first nine months of this year dropping by 1.4 per cent or 6,934 units to 485,388 units, compared to the same period last year.
Sales were lower from April to June 2015 on implementation of the Goods and Services Tax (GST), with most auto companies reportedly struggling to clear inventories in the face of weak consumer sentiment and tighter loan approvals that dampened sales.
The four-wheel drive (4WD or 4x4) and sports utility vehicle (SUV) segment was the year's savior for the auto sector and helped the industry cruise ahead into 2016 with a dramatic increase in TIV.
Data from the Malaysian Automotive Association (MAA) showed that although the TIV for the first nine months of this year had eased, the 4WD/SUV segment showed a dramatic increase of 72.8 per cent or 17,371 units.
Aggressive marketing efforts by the respective motor companies could be a key reason for the segment's dramatic performance against the backdrop of an overall cautious market scenario, said the MAA.
Meantime, the TIV in October rebounded 9.1 per cent month-on-month and 2.9 per cent year-on-year by 55,700 units. But, with an accumulative volume of only 541,000 units, it is likely that the industry's target of 670,000 will be missed.
The top market share leader in the passenger car category in October was still maintained by Perodua with its 35 per cent dominance, followed by Honda (17 per cent), Proton (16 per cent), and Toyota (13 per cent).
Perodua president Datuk Aminar Rashid Salleh said the company was confident of achieving its sales target of 208,000 units this year, continuing to be the most preferred automobile brand in Malaysia for the 10th consecutive year.
On research and development, Proton in the final quarter of 2015, had claimed that its focus on hybrid and electric vehicles (EV) had enabled the national carmaker to develop an ordinary car with an electric motor that could travel 313 km per charge and this record has not been achieved by other similar carmakers.
The project is still in its prototype stage and Proton is unwilling to disclose more, but according to people familiar with the matter, an EV or hybrid vehicle on a Preve or Iriz model chassis could be officially introduced by end-2016 or early 2017.
As for 2016, the outlook is still challenging for the automotive sector with stiff competition, while the unfavourable exchange rate will continue to have a large impact on the cost of imported materials that will subsequently squeeze the profit margins of auto companies with a lower localisation rate.
Worse still, a few companies have already announced a rise in prices effective 2016, including Toyota and Lexus, at an indicative 4-16 per cent increase, Honda by 2-3 per cent and Mitsubishi (2-7 per cent).
Proton is also mulling a price increase from January 2016 but has not specified the quantum.
On a positive note for consumers, the impact of various trade agreements that Malaysia is part of - including the Trans-Pacific Partnership Agreement (TPPA) - are expected to bring out the competitiveness of industry players in the future. This will benefit buyers.
Besides the price of crude oil which is expected to stay at low levels and translate to lower pump prices, consumers can look forward to a further drop in car and motorcycle prices in the coming years due to the impact of trade agreements, as open market policies promote competitiveness leading to improved pricing.
For instance, if the TPPA is signed, import duties on completely built-up units from the United States will be set at zero.
Meanwhile, Maybank Investment Bank (IB) Research introduced its 2016 TIV forecast of 645,000 units (-2 per cent year-on-year), which takes into account weaker consumer sentiment in light of the rising cost of living and poorer purchasing power from the weaker ringgit.
However, the support will come from the normal car replacement cycle, as 25 per cent of the 14 million cars on the road are above 10 years old, as well as an in-house 2016 real gross domestic product (GDP) growth forecast of 4.5 per cent.
-- BERNAMA
Source: http://www.bernama.com/bernama/v8/bu/newsbusiness.php?id=1201617
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