by BERNAMA/ pic by BERNAMA

THE closure of factories and sales outlets during the Movement Control Order (MCO) will result in an estimated 28 per cent drop in Total Industry Volume (TIV) by the end of 2020, according to the latest study by the Malaysia Automotive, Robotics and IoT Institute’s (MARii).

In a statement today, MARii said the lower TIV this year will happen if no measures are taken to resuscitate consumer spending within the sector.

Its chief executive officer Datuk Madani Sahari (picture) said to sustain the industry for the year ending 2020, MARii estimates that a TIV of at least 500,000 units is needed to ensure automotive businesses do not fall into a crisis.

“The year 2020 is no longer a year of profit for the automotive sector, but rather a year of survival. While it is understandable that consumer sentiment remains cautious due to the current economic challenges, we must also understand that the economy’s sustainability is dependent on consumer spending,” he said.

Temporary measures have shown an increase in vehicle purchases in the past, such as the previous tax holiday period which saw an increase in vehicle sales by 3.8 per cent year on year.

Madani said that innovative incentives can be introduced such as a temporary hiatus on down payments, reduced loan interest rates and joint-subsidies between carmakers and the government for road tax and insurance for a limited time period.

He said a combination of the incentives will remove the burden to buy a car, but do not affect their purchasing power as there will be a negligible difference between the monthly repayment amount for car buyers, at any level or segment.

Other innovative mechanisms such as “subscription-style ownership” – in which a car is lease based on certain conditions from the carmaker, where the car is still owned and maintained by the original equipment manufacturer (OEM) for a period of time before ownership is transferred to the buyer.

For owners of very old vehicles, MARii said voluntary scrap incentives by the carmaker can also be made an option, where the main benefit is a newer, safer vehicle with the latest technology for the new car owner.

“MARii believes that it is important to stimulate demand through the introduction of incentives to reduce consumer anxiety and address their concerns in purchasing vehicles, especially when they need to purchase new vehicles to continue on with their daily routines,” it added.