Lower vehicle sales expected in March due to Covid-19


VEHICLE sales in February dropped compared to January’s and the figure for March will be further lower amid the coronavirus pandemic.

Total industry volume (TIV), which covers the sales of passenger and commercial vehicles, fell 5.3% or 2,249 units to 40,403 last month against January’s, according to the Malaysian Automotive Association (MAA) data.

MAA said the month-on-month decline was due to delay in new model launches and a negative impact of the virus outbreak on consumers’ sentiments.

For March, the car manufacturer association is prepared for the worse. “Sales volume for March 2020 is expected to be lower than February 2020 following restrictions due to the Movement Control Order,” MAA said in a statement yesterday.

The 40,403 units of TIV were, however, 1.5% higher year-on-year (YoY) or by 590 units more than the corresponding month last year of 39,813 units. Automakers sold 36,702 units of passenger cars last month versus 36,725 in the same month in 2019.

The commercial vehicle segment delivered 3,701 units, an improvement from 3,088 from the previous month.

Production in February saw an increment of 1.1% YoY or 453 units to 40,371.

Original equipment manufacturers (OEMs) closed their vehicle production during this restriction period as non-essential services are told to shut down.

Authorised dealership and service centres are also affected during this period.

However, tow trucks are allowed to operate in case of a vehicle breakdown, but any servicing is scheduled for April 1 should the control order end.

Meanwhile, Hong Leong Investment Bank Research said TIV is expected to decline 8% YoY to 556,000 units this year from 605,000 units previously projected.

“2020 TIV will remain challenging as consumers feel uncertain on the economy as the country braces for the effects of Covid-19. OEMs will need to leverage new exciting model launches in 2020 to sustain sales volume and grab market share at the expense of others,” the company said in a report yesterday.

It said companies with a strong balance sheet will prevail and be able to provide sustainable dividend income to shareholders in the deteriorating business environment this year.

Moreover, the report added that weakened ringgit will increase the effective input costs for imported cars, completely knocked-down packs and raw materials which affect OEMs’ margins.

The company said OEMs that have major exposure towards the US dollar include UMW Toyota Motor Sdn Bhd, Tan Chong Motor Holdings Bhd, Honda Malaysia Sdn Bhd and Bermaz Auto Bhd.