Vehicle sales down 62% in May

The loss in volume is due to cautious consumer sentiment and RTD’s operation that only resumed on May 13

by RAHIMI YUNUS/ pic by TMR FILE

VEHICLE sales fell 62% in May to 22,960 units from 60,760 recorded during the previous year’s corresponding period as consumers continued to be more cautious on their spending particularly for big-ticket items.

Malaysian Automotive Association (MAA) also reported that sales volume last month was also 49% lower year-to-date compared to the corresponding five-month period in 2019.

“Generally, people were still fearful to come out and consumers’ sentiments remain cautious,” MAA said in a statement yesterday.

The automotive association also attributed the loss in volume to the operation of the Road Transport Department (RTD) that only resumed new car registration from May 13 onwards.

The 22,960 vehicles sold comprised of 20,456 units of passenger cars, down 63% from 55,894 units, and 2,504 units of commercial vehicles, which saw a decline of 49% from 4,866 units a year ago.

Meanwhile, MAA also reported that production dropped by 76% to 12,286 units compared to 51,454 vehicles that were manufactured in May last year. For June, MAA said sales volume outlook would be higher than that of May as businesses restarted after the lifting of restrictions for most economic activities.

Meanwhile, the traffic to car showrooms has improved after the announcement of the sales tax exemption by the government.

In early June, the government granted sales tax exemptions of 100% for locally assembled vehicles and 50% for imported units for six months until December to revitalise the automotive market after it grounded to a halt during the Movement Control Order.

Carmakers have also been announcing cheaper prices, averaging at 5% discount, according to brands and models.

MAA president Datuk Aishah Ahmad said the premium segment is less impacted than lower-range brands in the current challenging market as customers in the high-end bracket are relatively not as affected compared to the masses.

Despite the tax incentive, The Malaysian Reserve reported that buyers would find it harder to get car loan approval as banks are becoming more cautious in light of rising unemployment and uncertain economic conditions.

Aishah said lenders are also taking more factors into consideration in assessing financing applications, which means longer approval times.

She said it is now difficult to obtain a nine-year car loan and normally customers secure a seven-year loan or maximum 90% financing, depending on their creditworthiness.

Besides becoming more stringent, she said banks have reduced hire purchase loan quantum, particularly for used vehicles, and it varies based on brands.

Aishah added that carmakers have seen greater interest from consumers, but it is a little too soon to tell how much the positive development would be.