‘OFFER 10PC DISCOUNT TO BOOST SALES’
Association also urges banks to lower interest rate for hire-purchase loans to 3pc
ACAR dealers association has urged its members to offer up to a 10 per cent discount in order to reduce inventories of nearly 100,000 units nationwide.
Kuala Lumpur and Selangor Car Dealers and Credit Companies Association president Khoo Kah Jin said the promotion would help ease the burden of paper loss during the Movement Control Order (MCO) that started on March 18.
It would also provide a temporary buffer to dealers facing fixed monthly operational expenditure such as salaries, utilities and rentals, he told the New
Straits Times recently.
“They can also offer free maintenance service for a specific period and free one-year road tax and insurance coverage to entice potential customers.”
Industry players said more than 4,000 dealers and importers of used/re-conditioned cars could be drowning in red ink due to almost-zero sales, higher inventories and weaker consumer sentiment during the MCO period, further compounded by the high fixed operating costs.
Khoo said consumer sentiment would likely take between six and 12 months to return to normalcy as the public would be cautious in their spending post-MCO.
“Therefore, we suggest that interest rate of hire-purchase loans, currently at 4.0 to 5.0 per cent, be lowered to 3.0 per cent for used cars.
“We also propose that insurance companies either give rebates on motor insurance for the MCO period, or extend the insurance coverage duration,” he said.
On loans from banks, he said dealers had already been offered up to RM1 million with an interest rate of 3.5 per cent per annum, compared with 6.0 to 7.0 per cent previously.
Meanwhile, an industry source said import duties for luxury cars should be revised downwards to between 10 and 25 per cent for six months to one year as the vehicles were deemed “big-ticket” items.
“The government can still collect import duty but it should provide a ‘discount’ during the proposed period to ensure sales activity and continuity of collection of duties,” he said.
The source said import duties on luxury vehicles should be lowered so as to spur sales and encourage spending.
“Banks can make money from loan disbursement while car dealers can sustain their operations.”
Car dealers reportedly have submitted a joint memorandum to the Finance Ministry on their recommendations for sustaining their businesses.
Their proposals include higher handling fees for hire-purchase loans, excise duty exemption until year end and rate cut for the Employees Provident Fund contributions.
Malaysia Automotive, Robotics and IoT Institute (MARii) chief executive officer Datuk Madani Sahari said consumers’ purchasing habits were likely to change post-MCO.
However, he said purchase decisions should be based on necessity and not trends.
“Buy a car if you need a car. It should not be based on seasonal trends. Consumers are advised to make their purchase decisions based on the overall transportation costs.”
Madani said their calculations should include fuel costs, maintenance costs of ageing vehicles, insurance and used vehicles value depreciation.
He said vehicle purchases would need time to recover as the need for vehicles would not cease despite the MCO.
“The most important aspect is how businesses adapt to changes. For example, we can already see an increase in adoption of technology and online orders during the MCO period.”
This, he said, could translate into possible increase in demand for fleet operations and transportation for commercial use, despite the slowdown in individual purchases.
Prime Minister Tan Sri Muhyiddin Yassin recently announced that almost all economic sectors and business activities would be allowed to resume operations starting today.
However, he said they would still have to adhere to the standard operating procedures set by the authorities.