Will Auto-Vehicle Sales Be 600,000?

 

The sales tax holiday has been extended to end 2021. Under this initiative, locally assembled cars are fully-exempted from sales tax, while imported cars have sales tax reduced from 10% to 5%.

Under the present FMCO, auto vehicle and component manufacturing facilities are only allowed to operate at 10% work-force capacity. That means a backlog of deliveries, perhaps up to four months.

The Malaysian Automotive Association (MAA) projects total industry volume (TIV) at 570,000 for 2021, an 8% growth. In July, MAA may revise this forecast. Meanwhile, Maybank IB is maintaining its estimate of 600,000 units for the year.

Then there is the much-delayed electric vehicle policy. To be a success it needs charging stations, incentives to keep prices attractive and adequate promotion by dealers.

China wants to dominate the global electric vehicle market. It has invested USD60 billion to support the EV industry. All vehicles in China will be electric or hybrid by 2035.

China has sold 1 million more vehicles than the U.S. in 2020. The U.S. is to reach a net-zero emissions by 2050 at the earliest.

Bloomberg

Since last July, a little-known automaker in China’s south-west dominated the largest electric car market. It outsold bigger players and Tesla Inc. every month with a bare-bones EV at just USD4,500.

The Hongguang Mini is the brainchild of SAIC-GM-Wuling Automobile Co., a joint-venture between SAIC Motor Corp., Guangxi Automobile Group Co., and General Motors. The venture is based in the city of Liuzhou. In nine months, it sold 270,000 units making it the bestselling EV in China. It plans to sell 1.2 million vehicles in 2022 – the same as all EVs produced in China in 2020.

The car’s key selling points are price and its ability to customize vehicles for consumers benefit. Car panels and body can be transformed to Nike Swoosh, Hello Kitty or Doraemon.

Outside of Liuzhou, EV penetration in China is only 6% and competition is fierce. BYD and Daimler are expected to provide that competition!

For Wuling Motors and the Hongguang Mini it is price, customization, quality, marketing and supply chain management.

Will we see the Hongguang mini in Malaysia or wait for Geely to decide? The Government too has to play a direct role to incentivise EV sales, like in China and the U.S. Will we do that?

So, will we have 600,000 sales in 2021? Well it depends on further lockdowns, vaccinations, EV policy and whether people have disposable income for cars.

 

Reference:

1.     Eugene Mahalingam, Bolstering vehicle sales, 8 Jun 2021, The StarBiz.

2.     In China, a little-known EV maker is leaving Tesla in the dust, Bloomberg, 7 June 2021.