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Vehicles shift to lower gear [08-02-2012]  
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Total vehicle sales this month are expected to be lower than the 40,387 units achieved in February 2011, mainly due to the extended holiday period as a result of the earlier timing of Chinese New Year (CNY), according to analysts.

“February 2012 is likely to be slightly lower (than that of last February) due to the extended holiday period. Typically, most vehicle purchases happen before CNY, hence we expect February to be slow,” said Frost & Sullivan partner and head for automotive and transportation practice, Asia-Pacific, Kavan Mukhtyar.

OSK Investment Research analyst Ahmad Maghfur Usman concurred: “The holiday season and shorter month will typically see lower sales. Furthermore, with the stringent lending policies by banks, I expect overall numbers in totality to be lower year-on-year.

Record in the making: Vehicle sales depend largely on consumer sentiment. Total sales in Malaysia are expected to grow 2.5% to a new high of 615,000 units this year.

“Consumer sentiment is a factor but what's more of a concern is the stringent lending policies by banks to approve loans. Approvals have been on a downtrend since the second half of last year.”

Starting this year, banks have been using net income instead of gross income to calculate the debt service ratio for loans. According to reports, this is a pre-emptive move by Bank Negara to contain the rise in consumer debts. The measure covers all consumer loan products, including car loans.

Kavan also said the stringent loan approval process would have an impact on total vehicle sales.

“As a result after the festive period, the consumer sentiment for buying vehicles may become neutral to mildly negative,” he said, adding that the global economic environment was also expected to be uncertain.

As for vehicle sales in January 2012, Kavan said it was expected to be moderately higher than the 54,781 units sold in the previous corresponding month.

“There was a delivery backlog in the fourth quarter of 2011 due to the Thai floods. The supply situation has since improved and, due to the festive period, vehicle registrations are expected to be higher in January,” he said.

The Malaysian Automotive Association (MAA) will announce the total vehicle sales recorded for January 2012 later this month.

At a briefing early last month, MAA president Datuk Aishah Ahmad said total vehicle sales in January would be boosted by promotional campaigns by car companies and the rush for deliveries for the CNY festival.

Total vehicle sales slipped to 600,123 units in 2011 from Malaysia's all-time-high of 605,156 units in 2010, as sales were affected by the production disruptions that were caused by the Japan earthquake in March last year and the subsequent Thailand floods.

The MAA has forecast total vehicle sales to grow 2.5% to 615,000 units this year. If this is achieved, it will be a new record for the nation.

Source:THE STAR
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