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Car dealers in Malaysia remain concerned [27-02-2012]  
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AUTOMOTIVE players are apparently not happy with the outcome of their dialogue with Bank Negara Malaysia last Friday to help resolve issues related to the new lending guidelines.

After the nearly two-hour meeting, Bank Negara appeared to focus more on the implementation of the new ruling, and less on the ruling itself, Proton Edar Dealers' Association (Peda) said.

Its president Armin Baniaz Pahamin said Peda lauded Bank Negara's resolution to ask banks to issue a standard guideline to educate the public on standard approval criteria and documentation required for vehicle loan processing.

But the automotive market is still in crisis from slow and low hire purchase loan approval rate, Armin said.

The Malaysian Automotive Association (MAA) last week said new vehicle sales in January had dropped 25 per cent or a whopping 13,833 units to 40,948 units, from 54,781 units in the same month in 2011.

Industry players claimed that the stricter hire purchase processes since January 1 this year had caused a high rejection rate for such loans.

Armin said the approval rate for vehicle financing in January was only 30 per cent although Bank Negara's official records show a 54 per cent approval.

"Peda understands and shares the objective and intent of the guideline, which promotes lending based on affordability but the interpretation of affordability was overplayed by the banks.

"Although in record the approval rate was 54 per cent for vehicle financing in January, a substantial number of loan applications were not even accepted for processing (thus did not add to the statistics of loan submission), which totalled up to an only 30 per cent approval rate," he claimed.

He added that the general public will not even visit a car showroom if they think they do not qualify to apply for car loans.

"By this time, the damage to the industry will be severe and vehicle manufacturers will have to revise their production downwards. This will in turn affect the entire system," Armin said in a statement yesterday.

Armin believes the automotive industry's business environment will be improved with the Bank Negara clarification and it looks forward to a speedy solution.

Meanwhile, Peda plans to meet the Ministry of International Trade and Industry and Ministry of Finance to seek a revision on vehicle excise and taxes and discuss other methods that could lead to cheaper cars.

Armin said with cheaper cars through lower excise and tax or other means, Malaysians can afford to buy cars without affecting the automotive ecosystem.

He added that the industry's growth will be sustained and household debts will be reduced when cars are priced lower.

"When more people can afford to buy cheaper cars, we can also benefit from a good economies of scale that will be translated into further reduction in car prices," he said.

He noted that the average population-to-vehicle ratio in developed countries such as America and Europe are three times higher than Malaysia because their cars are cheaper and more affordable.

Armin said Peda would also seek further clarification on the government's future direction for the automotive industry.

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