MCO has halted production and shut down car outlets, while cash-strapped dealers rapidly sink into the abyss
by RAHIMI YUNUS/ pic by TMR FILE
NEW vehicle sales in March dropped 60% year-on-year to 22,478 units, with over 32,000 fewer vehicles rolled off showrooms during the Movement Control Order (MCO).
Malaysian Automotive Association (MAA) also reported that sales volume plunged 44% last month compared to 40,403 units delivered in February as coronavirus crippled the automotive industry.
Since March 18, the MCO has halted production and shut down car outlets, while cash-strapped dealers rapidly sink into the abyss.
“The outlook for April 2020 sees no sales as the MCO was extended until April 28 (for the third phase). Showrooms are closed,” MAA said in a statement yesterday.
Car manufacturers have resorted to online platforms during the stay at home order in a bid to keep businesses afloat, but it is expected to be hardly feasible and will not be producing encouraging numbers.
Automotive companies are unable to register new cars as services are only available for commercial vehicles at this juncture, which make delivery impossible.
As such, MAA president Datuk Aishah Ahmad said online responses in terms of booking would not be great because customers will still prefer to visit showrooms and test drive cars, and all the purchasing experience the cars offer.
“It is a new normal. We have to contact customers and offer car models online which most companies have done so. The response may not be as great, but we have no choice,” Aishah told The Malaysian Reserve (TMR).
Dealers and principals are resorting to digital showrooms with low booking deposits and special promotions to at least keep the orders coming in despite huge restraints.
Car dealers said they have planned to offer value-added products and services to attract buyers post-MCO, but any price reduction would be guided by policies of the principal.
The automotive retail segment is struggling with the rental of between RM50,000 and RM70,000 a month for 3S (sales, service and spare parts) centres located in Kuala Lumpur (KL), according to a source.
A monthly lease of a 4S (3S and body paint shop) premise is said to be about RM70,000 to RM120,000.
Many dealers are staring at losses up to RM300,000 when outlets are forced to close during the MCO, according to another source.
Five car dealers associations — namely Perodua Dealers Association Malaysia, Proton Edar Dealers Association Malaysia, Honda Dealers Association Malaysia, Toyota Dealer Council Malaysia and Federation of Motor and Credit Companies Associations Malaysia — have submitted a joint memorandum to the Finance Ministry to recommend measures to help the industry.
The sector is asking for a grant allocation or subsidies to car producers, “handling fees” increment for hire-purchase loans’ commission from financial institutions and excise duty exemption until the end of the year.
According to the document sighted by TMR, the industry is also seeking a rate cut for employers’ Employees Provident Fund’s contribution, as well as exemptions from contributing to the Social Security Organisation, Employment Insurance System and Human Resources Development Fund, among a few other measures.