BUYERS POSTPONE PURCHASERS: New vehicle sales for May stood at 49,634 units, down 15 per cent from May 2012
SALES of new and used vehicles continue to shrink following rumours that prices will drop substantially, industry players said.
They noted that the sales volume had plunged by double-digits year-on-year in May as many consumers postponed car purchases.
Based on the Malaysian Automotive Association data, new vehicle sales for May stood at 49,634 units, down 15 per cent from May 2012 and 5.4 per cent lower than in April this year.
"Used car dealers may have to cut prices to take control of the situation. Otherwise, they will have to face keeping over 150,000 cars in their stockyard from around 100,000 currently," an industry executive said.
"Car manufacturers will have to spend more on innovation and providing higher value specs," he added.
There is concern that total sales or total industry volume (TIV) will finish off at under 600,000 units this year.
Despite global economic challenges, 2012 saw yet another record for the industry as the TIV finished off at 627,753 units. This was 4.6 per cent or 27,630 units more than 2011's TIV.
There are three types of car duties - import duty (30 per cent), excise duty (between 60 per cent and 105 per cent) and sales tax (10 per cent).
In March, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the import duty on cars from Japan and Australia will be gradually reduced from 30 per cent to 0 per cent by 2016.
At the launch of the Miti Report 2012 yesterday, Mustapa reiterated that while import duty will be gradually removed, the government has no plans to reduce the excise duty of imported and locally-manufactured cars.
"The government has promised that car prices will be reduced by between 20 per cent and 30 per cent in five years.
"A sudden cut will impact the government's revenue from excise duty, which is about RM7 billion a year. Market forces will determine how much and when prices will be reduced," he said.
Meanwhile, Miti will focus on the African markets this year, amid global uncertainty, to increase trade and investments, Mustapa said.
According to the Miti report, Malaysia's performance in trade and investment was above expectation last year against the backdrop of uncertainties and challenges in world economy.
Despite the challenges, Malaysia's manufacturing sector grew 4.8 per cent and services sector by 6.4 per cent.
Trade volume was maintained at RM1.3 trillion with exports hiting a new high of RM702.2 billion and direct investments receiving RM162.4 billion.
"In terms of trade outlook, we could achieve between four per cent and five per cent growth. Bank Negara Malaysia is a bit more conservative with three per cent and four per cent growth projection," he said.