PETALING JAYA: The Malaysian automotive sector is expected to shift into lower gear in 2019 as total vehicle sales are projected to be flattish, marking a sharp reversal from last year’s stronger-than-expected sales performance.

Anticipating a meagre 0.21% growth in total industry volume (TIV) for 2019, the Malaysian Automotive Association (MAA) said the Pakatan Harapan government is partly to be blamed for the slower automotive sales.

In 2018, the local automotive sector’s TIV grew 3.8% to 598,714 units, exceeding MAA’s earlier forecast of 1.5%.

MAA president Datuk Aishah Ahmad said that the government’s delay in approving new car models’ pricing has negatively affected carmakers’ plans to launch new models.

The delay, in turn, is expected to take a toll on the overall sales of new vehicles this year.

Aishah explained that the Finance Ministry has channelled decision-making processes related to the Industrial Linkage Programme – which provides incentives for qualified locally-assembled vehicles – to the Automotive Business Development Council (ABDC).

The ABDC consists of the Customs Department, the International Trade and Industry Ministry, the Finance Ministry, the Malaysia Automotive, Robotics and IoT Institute, as well as the Malaysian Investment Development Authority.

“Even after the committee has decided, it goes back (to the Finance Ministry) and the papers are not coming out. We have voiced this out, it is very difficult because we cannot get the prices and therefore cannot launch the models.

“I cannot mention specifically, but many of our members have been affected by this delay.

“There are a lot of models which we have showed during the motor show and we are supposed to launch them, but until today, we still haven’t got the official prices,” Aishah told reporters during the MAA press briefing yesterday.

Aishah also pointed out that the slower economic growth, weakness of the ringgit, moderation in consumer spending and stringent lending requirements for hire purchase loans were among the key challenges for the domestic automotive sector in 2019.

However, she said that the introduction of new vehicle models and the continuation of aggressive promotional campaigns by carmakers should sustain buying interest.

Echoing a similar stance with MAA, MIDF Research analyst Hafriz Hezry Harihodin told StarBiz that automotive sales in 2019 would likely be flattish due to the high base seen last year.

“The 2018 TIV base is already pretty inflated because of the tax holiday,” he said, referring to the three-month period last year after the Pakatan government zerorised the goods and services tax between June and August 2018.

Hafriz forecasts the automotive sector’s TIV to hit 599,000 units in 2019, slightly lower than MAA’s projection of 600,000 units.

He also said that the automotive sector would see market share shifts in 2019, rather than outright industry growth.

“For example, UMW is looking to introduce new Toyota models in segments where it is currently under-represented via its new Bukit Raja plant. Meanwhile, national cars, Proton and Perodua, are launching their maiden sport-utility vehicle (SUV) models,” he said.

When asked whether both Proton and Perodua could increase their market share in 2019 given their recent launches, Hafriz said it is likely.

Proton launched its maiden SUV, the X70, on Dec 12 last year. Meanwhile, Perodua’s SUV – Aruz – was launched on Jan 15.

“These are models that fill up gaps in their model mix. Perodua’s TIV will likely hit a new record in 2019, following a recent high in 2018,” he said.

MAA’s data showed that a total of 598,714 vehicles were sold in 2018, of which 514,675 were passenger vehicles and 65,512 were commercial vehicles.

Perodua retained its top ranking in terms of total vehicle sales, as the carmaker enlarged its market share from 35.5% in 2017 to 38% in 2017.

Honda ranked second with a market share of 17.1%. Toyota rose to the third spot in 2018 with 10.9%, beating Proton, which slipped to fourth position with 10.8%.

Source: https://www.thestar.com.my/business/business-news/2019/01/17/car-sales-to-shift-to-lower-gear/#C6GoTlVlcalbBGLa.99