CYBERJAYA: The Malaysia Automotive Institute (MAI) expects vehicle sales or total industry volume (TIV) to increase 10% to 770,000 units this year, if the government and carmakers reintroduce the car rebate system this year, said MAI chief executive officer Madani Sahari.
The system — also known as “cash for clunkers” — is an incentive scheme for car owners to purchase a new vehicle in exchange for an old one which is more than 10 years old. It is estimated that there are five million cars aged between 10 and 15 years on the road.
“We are in talks with the government and manufacturers to reintroduce this scheme for all car types. If implemented this year, the scheme is expected to boost TIV by 10% to a record high of 770,000 units by year-end,” he told a media briefing on “Malaysia Automotive Industry: Review & Insight 2014/15” yesterday.
He said the rebate can amount to RM5,000 per vehicle, to which both the government and the carmakers can contribute RM2,500 each.
The government introduced the scheme in 2007 for national car brands — Perusahaan Otomobil Nasional Sdn Bhd (Proton) and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) — at a cash rebate of RM5,000 per vehicle to prevent a crippling plunge in sales.
It was discontinued in 2009 after 31,046 vouchers were reported to have been disbursed. The scheme saw TIV jump 24% to 605,156 units in 2010 from 487,176 units in 2007.
Even without the cash for clunkers scheme, government-backed MAI is confident TIV will grow 5.1% this year to 700,000 units (2014: 665,675 units) on aggressive promotion of new models that will be launched at competitive prices.
It was previously reported that the government is targeting a TIV of one million units by 2020, on successful implementation of the National Automotive Policy 2014 (NAP 2014). International Trade and Industry Minister Datuk Seri Mustapa Mohamed is expected to give an update on the progress of NAP 2014 on Jan 29.
Based on data from the Road Transport Department, Madani said TIV in 2014 has marginally increased by 1.5% to 665,675 from 655,793 in 2013.
MAI’s target for 2014 was 670,000 units while the Malaysia Automotive Association (MAA) thinks it will be 680,000 units. MAA is expected to announce 2014’s performance on Jan 21 but it is expected that it will fall short of both their targets.
Analysts, meanwhile, reckon TIV will contract this year on cautious consumer spending, mounting prices and margin pressures.
“The sector is underweight and TIV is likely to contract 3% this year on rising inflationary pressure that would dent growth. We forecast TIV will decline 3% to 650,000 units, translating to average monthly sales of 54,000 units,” UOB Kay Hian Research analyst Chong Lee Len said in her research note late last year.
According to Madani, Proton and Perodua are expected to clinch a combined market share of 52% this year, based on the potential attractiveness of newly launched models and variants.
The combined market share for national carmakers eroded to 46.8% last year from 51.1% in 2013, no thanks to stiff competition from imported cars.
On car price reduction, Madani reiterated prices should drop by 1% to 3% once the goods and services tax (GST) comes in on April 1.
“The GST means car manufacturers will be paying lower tax to the government. In tandem, the car price should also drop, unless extenuating circumstances would not allow them to do so,” he said.
This article first appeared in The Edge Financial Daily, on January 13, 2015.