Mar­ket play­ers op­ti­mistic about 2014

The Star Malaysia - Star2 - - MOTORING -

WITH this year al­most draw­ing to a close, the fo­cus will be on the to­tal sales tally for the year. Ac­cord­ing to fore­casts by the Malaysia Au­to­mo­tive As­so­ci­a­tion (MAA), new ve­hi­cle reg­is­tra­tion is ex­pected to break the pre­vi­ous record of 640,000 units.

The fi­nal sales tally will only be tab­u­lated at the end of Jan­uary, and al­ready mar­ket play­ers are plot­ting the chart for the next year.

De­spite MAA’s pos­i­tive ex­pec­ta­tions for this year’s re­sults, cer­tain quar­ters have pointed out that the past few months have pro­duced a num­ber of speed bumps that might de­rail the as­so­ci­a­tion’s ini­tial pro­jec­tion, which were an­nounced in July this year.

For al­most the en­tire month of Novem­ber, car com­pa­nies com­plained about glitches at the Road Trans­port Depart­ment’s (JPJ) new MySikap online ve­hi­cle reg­is­tra­tion, which has caused sig­nif­i­cant de­lays to their busi­ness deal­ings.

Usu­ally, it would take a dealer about one or two days to reg­is­ter a new ve­hi­cle, but re­cent hitches in the sys­tem has led to many back­logs, stretch­ing the time re­quired to about a week.

Al­though the sit­u­a­tion is grad­u­ally im­prov­ing, Dave Lim Keat Hiin, Deputy Pres­i­dent of the Fed­er­a­tion of Mo­tor & Credit Com­pany As­so­ci­a­tion of Malaysia – Kuala Lumpur and Se­lan­gor, says that the sys­tem is only ex­pected to nor­malise by Jan­uary next year.

Mean­while, the best sell­ing non-na­tional brand Toy­ota, which ac­counts for about 15% of all new ve­hi­cles sold, has ex­pe­ri­enced a slow year.

In Oc­to­ber, UMW Toy­ota an­nounced that it is only ex­pect­ing to sell 90,000 ve­hi­cles by the end of the year.

The tar­get is sig­nif­i­cantly lower than the com­pany’s record­break­ing per­for­mance in 2012, which saw 105,100 ve­hi­cles sold (ex­clud­ing Lexus).

Com­pany pres­i­dent Datuk Is­met Suki at­trib­uted the lower tar­get to the phas­ing out of the pre­vi­ous gen­er­a­tion of the Toy­ota Vios, the com­pany’s top sell­ing model.

The com­pany had to sac­ri­fice nearly two months worth of pro­duc­tion for the Vios, as it re­tooled its as­sem­bly plant to cater to the new third gen­er­a­tion model.

How­ever, run-out sales pro­mo­tion for its Corolla Altis model has been bet­ter than ex­pected, re­sult­ing in a dearth of mod­els be­tween now and the all-new Corolla Altis model, to be launched in Jan­uary.

On the fi­nanc­ing front, sev­eral banks, es­pe­cially the more pru­dent ones, are start­ing to tighten up on car loans.

Al­though there have been no changes to Bank Ne­gara’s Re­spond­ing Fi­nanc­ing Guide­lines limit of a nine-year ten­ure pe­riod with 90% mar­gin, sev­eral banks are adopt­ing a cau­tious ap­proach go­ing into the new year and are vet­ting bor­row­ers un­der their own stricter in­ter­nal guide­lines.

Go­ing into next year, macroe­co­nomic in­di­ca­tors are point­ing to­wards a mildly strong year ahead.

The Malaysian In­sti­tute of Eco­nomic Re­search (MIER) is fore­cast­ing a GDP growth of be­tween 5 and 5.5% for next year, slightly higher than Bank Ne­gara’s fore­cast of 4.5 to 5% for last year.

While th­ese in­di­ca­tors seem healthy, MIER has cau­tioned against weak­en­ing pri­vate do­mes­tic spend­ing, which is more rel­e­vant to dis­cre­tionary spend­ing like new ve­hi­cle pur­chases.

The re­sult of MIER’s third quar­ter 2013 Con­sumer Sen­ti­ments Sur­vey has shown a Con­sumer Sen­ti­ments In­dex de­cline of 7.7 points quar­ter-on-quar­ter, to set­tle a lower bench­mark of 102.0 points, the low­est since the first quar­ter of 2009.

In the past, new ve­hi­cle sales in Malaysia have shown great re­silience against a back­ground of dif­fi­cult eco­nomic con­di­tions. Be­tween 2010 and 2012, the Malaysian car mar­ket had set new sales records twice.

In 2010, to­tal in­dus­try vol­ume smashed through the 600,000 units per year bar­rier to reg­is­ter 605,156 ve­hi­cles.

Year 2012 raised the bar even fur­ther by reg­is­ter­ing 627,753 ve­hi­cles.

Much of this is at­trib­uted to easy avail­abil­ity of credit, which fu­elled the coun­try’s seem­ingly in­sa­tiable ap­petite for new cars.

For bet­ter or for worse, Malaysia’s prac­tise of of­fer­ing an un­usu­ally long max­i­mum loan ten­ure pe­riod of nine years at low in­ter­est rates of be­tween 2.5 and 3.5% is an anom­aly when com­pared with other coun­tries.

The sub­ject of high car prices and the high de­pen­dence of pri­vate cars among Malaysians only serves to in­ten­sify scru­tiny on the sub­ject.

Still, Bank Ne­gara is not ex­pected to change its overnight pol­icy rate (OPR) of 3%. “While the move is in line with the need to sup­port growth of the econ­omy, con­crete mea­sures for short-term sta­bil­i­sa­tion are ur­gently re­quired, as the de­pre­ci­at­ing ring­git and weak­en­ing terms of trade af­fect do­mes­tic con­sumer prices and in­fla­tion,” says a source from MIER, in re­la­tion to Bank Ne­gara’s pol­icy of main­tain­ing the flat OPR for so long de­spite healthy growth.

There could also be an in­ten­si­fy­ing strug­gle be­tween Toy­ota and Honda in the com­ing year.

Of late, sev­eral Toy­ota mod­els have come un­der in­tense com­pe­ti­tion and the brand risks los­ing mar­ket share, es­pe­cially in the pas­sen­ger car seg­ment (Honda does not com­pete in the com­mer­cial ve­hi­cles seg­ment).

Go­ing into the new year, Honda is widely ex­pected to shock the mar­ket with an of­fen­sive led by a se­ries of com­pet­i­tively priced prod­ucts.

The up­com­ing all-new fourth gen­er­a­tion Honda City, which was re­cently pre­viewed in In­dia, is promis­ing seg­ment-lead­ing cabin space and fuel econ­omy, wrapped in a pack­age that is the best look­ing in its class.

Ex­pected spec­i­fi­ca­tions in­clude legroom that matches ve­hi­cles po­si­tioned two classes higher, touch-panel au­to­matic air-con­di­tion­ing with rear air­con­di­tion­ing blower, eight-speaker au­dio sys­tem, plus an eco­nom­i­cal hy­brid vari­ant.

Other new mod­els in­clude a new hy­brid vari­ant of the Honda Ac­cord, a very for­ward-look­ing third-gen­er­a­tion Honda Jazz and a com­pact crossover de­riv­a­tive model called the Vezel.

An en­try-level, seven-seater multi-pur­pose ve­hi­cle called the Mo­bilio may also be in­tro­duced.

The Mo­bilio is aimed at com­pet­ing with the Nis­san Grand Livina and Toy­ota Avanza.

Judg­ing by the trend es­tab­lished by re­cent Honda mod­els, in­dus­try play­ers are brac­ing them­selves for a price war with Honda’s up­com­ing of­fer­ings.

In March this year, Honda Malaysia ruf­fled some feath­ers when it in­tro­duced the fourth gen­er­a­tion Honda CR-V at a lower price than the out­go­ing model – RM1,180 less to be spe­cific.

It has al­ways been a norm for car com­pa­nies to marginally bump up prices of ev­ery suc­ces­sive new model, jus­ti­fy­ing that new mod­els cost more to de­velop, be­cause it is a bet­ter prod­uct and comes with more fea­tures.

How­ever, in July, Honda Malaysia dropped a bomb­shell in the form of a lo­cally as­sem­bled Honda Jazz and shocked the in­dus­try by pric­ing it at RM74,800, with a de­cent list of fea­tures to boot.

Fi­nally in Septem­ber, Honda wrapped up its new mod­els with a ninth gen­er­a­tion Honda Ac­cord that starts RM3,000 be­low the pre­vi­ous en­try price.

And this is de­spite of­fer­ing a far more com­fort­able ride and much more fea­tures than the pre­ced­ing model.

There is lit­tle rea­son to be­lieve that the pace of price for up­com­ing Honda mod­els will ta­per off next year.

Cur­rently, all of Honda’s mod­els that were launched re­cently in­clud­ing the Civic, CR-V, Jazz and Ac­cord, are best sell­ers in their re­spec­tive seg­ments.

New ve­hi­cles sales are pro­jected to hit a new record of 640,000 units this year.

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