MAA wants the govt to relax hire purchase financing rules and provide tax reliefs for at least 1 year
by RAHIMI YUNUS/ pic by TMR FILE
CARMAKERS want the government to relax hire purchase rules and slash various taxes as the country braces for a recession and the mounting financial fallout due to the coronavirus pandemic.
Malaysia is the third-largest car market in South-East Asia based on car sales, selling 604,000 vehicles last year with the sales value of manufactured vehicles topping RM30 billion.
Outstanding hire purchase loans for passenger cars stood at RM156.2 billion as at the end of February, according to central bank’s figure.
Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad (picture) said automotive players are requesting for the government to relax hire purchase financing rules and provide tax reliefs for at least one year.
“We are going to send a memorandum to the government probably next week to propose the hire purchase relaxation and reduction of taxes placed on carmakers for at least one year.
“During this period, we seek to make it easier for people to buy cars and get loans approved,” Aishah told The Malaysian Reserve.
The government has allowed for a six-month loan and financing deferment to prevent widespread bad debts and increase consumers’ disposable income as the nation battles the Covid-19 pandemic. The six-month moratorium alone totalled about RM100 billion.
Car sales have come to a stop since the Movement Control Order (MCO) was imposed by the government on March 18 and vehicle sales are expected to plummet in March and April.
The automotive industry has been grounded to a halt with “nothing really moving”, Aishah said.
Car production plants and after-sales services have been shuttered during the 28-day MCO.
Malaysia has more than 20 manufacturing and assembly plants that produce passenger and commercial vehicles, as well as two-wheelers.
The industry contributes about RM40 billion or 4% of the country’s GDP, employing close to 700,000 people, 53,000 aftermarket establishments and over 600 parts and components suppliers.
MAA recently reported vehicle sales in February had dropped compared to January’s deliveries.
Total industry volume (TIV), which covers the sales of passenger and commercial vehicles, fell 5.3% or 2,249 units to 40,403 in February against the previous month due to delays in new model launches and the negative impact of the virus outbreak on consumers’ sentiments.
Car manufacturers are preparing for the worst in the coming months.
“Sales volume for March 2020 is expected to be lower than February 2020 following restrictions due to the MCO,” MAA said in a previous statement.
The TIV of 40,403 units 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 in February 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.
Last year, 604,287 vehicles were delivered including 550,179 private vehicles.
The country is also bracing for a possible recession and dented consumer sentiments. During the 2009 recession, passenger vehicle sales stood at 486,342, while the TIV dropped to 536,905 units.
Affin Hwang Investment Bank Bhd has cut its 2020 TIV assumption by 20% to 485,000 units, RHB Investment Bank Bhd expects a 15% YoY drop to 515,000 units and MIDF Amanah Investment Bank Bhd slashed deliveries by 3.8% YoY to 581,367 units.
Kenanga Investment Bank Bhd slashed its automotive forecast by 6.7% to 560,000 units, while Hong Leong Investment Bank Bhd reduced the figure by 8% YoY to 555,900 units.