Car dealers posted total losses of more than RM14 billion in June and July this year. Why? Sales of vehicles crashed with the MCO. Production plants, distribution centres and sales centres were closed from June 1, 2021.
The Malaysian Automotive Association (“MAA”) who have about 1,300 dealers said that there are repercussions on the entire automotive eco-system. Sales of motor vehicles was only 1,921 units and 7,086 units in June and July respectively. In the first seven months of this year, 256,215 units were sold, up 23,792 units (10.2%) from 232,423 units recorded in the same period last year. Total industry production for June and July were 276 units and 2,775 units respectively.
Many smaller car dealers are severely impacted by the lockdowns. Cash flow and retaining employees are their key problems.
With the reopening activities on August 16, 2021 there is some hope. Although there will be some pent-up demand, many will defer purchases of new cars with the uncertainties prevailing. The Government could engage with MAA and others on how best the sector could move forward. Financing for buyers will be another key issue with many banks taking a very prudent view by rejecting “marginal” borrowers.
Perhaps, this is a good time to review the National Automotive Policy (“NAP”) and address the way forward for electric vehicles (EV). Malaysia must speed-up its implementation of EVs or we will be playing “catch-up” to other nations like Singapore. The new Government may have many things on its plate, but reviewing and injecting new zeal in the industry and commerce will be a welcome move.
Source: https://www.freemalaysiatoday.com
Reference:
MAA: July vehicle sales rebound 270% m-o-m, with easing of restrictions in Sabah, Sarawak, Justin Lim, theedgemarkets.com, August 17, 2021
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