Thursday 28 Mar 2024
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KUALA LUMPUR (Aug 19): Malaysians bought more cars in July compared with a year ago despite lingering economic uncertainties.

The country’s car sales volume went up 13% to 57,552 units from 50,854 units in the same month a year ago boosted by the sales tax holiday amid aggressive promotional campaigns by manufacturers and distributors, according to the Malaysian Automotive Association (MAA).

The growth in sales volume was stronger at 29% against 44,695 units sold in June.  

In a statement, the MAA said a "longer working month” in July 2020 also contributed to the higher sales volume.

Between January and July 2020, cumulative sales volume however fell to 232,245 vehicles from 347,171 vehicles a year earlier.

Vehicle production fell in July 2020. The MAA said the number of vehicles produced, comprising passenger and commercial units, fell to 47,631 units from 48,912 units a year earlier.

Year-to-date, total vehicles produced was lower at 213,680 from 333,552 a year earlier.

Looking forward, MAA said it expects sales volume in August 2020 to be maintained at July 2020 levels on sales tax exemption incentive for CKD and CBU vehicles besides ongoing promotional campaigns by car companies.

Auto analysts contacted by The Edge commented that the increase in car sale volume did not come as a surprise as they expected pent up demand as a result of the Movement Control Order in the second quarter.

In addition, the tax holiday gave another boost to car sales.  

However, analysts do not expect the growth in sales volume to translate into higher earnings among the auto makers, noting that the weaker ringgit against the US dollar and Japanese yen would squeeze profit margins on top of sales lost during the MCO period.

“The increase was mainly on account of the SST tax holiday, as well as auto marques selling their backlog vehicles, more promotional activities and a higher number of car launches,” said an analyst.

He viewed that the monthly car sales would be hovering around the July level for the rest of the year, and if that happens, the MAA’s target of 470,000 total industry volume (TIV) could be achievable.

In July, the MAA revised its 2020 TIV forecasts to 470,000, from the 400,000 units estimated in April and 607,000 forecast in January.

“Sales momentum will be good for the rest of the year, but it won’t be like the sudden boost seen in the three-month tax holiday following the zero-rating of the Goods and Services Tax (GST) seen in 2018,” said another analyst who declined to be named.

It is worth noting that July’s 57,552 units sold are still below the 68,465 units sold in July 2018, at the height of the GST holiday.

Affin Hwang Research’s analyst Brian Yeoh on Monday revised his TIV forecast to 465,000 units, from 485,000 units previously estimated.

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