Car sales pick up again after slowdown

PETALING JAYA - After a period of holding back, car buyers are returning in greater numbers ahead of the coming festive holidays.

Automotive distributors are cashing in on the Hari Raya season, offering sales promotions that are described as one of the most aggressive in years.

The promotions include waived instalment repayments for a limited period, free insurance and road tax, rebates on accessories and gifts in the form of petrol cards, smartphones, televisions and shopping vouchers.

Distributors are also offering after-sales and service promotions, with the emphasis on getting vehicles in ship-shape condition for long-distance driving to hometowns.

The sales blitz comes in the wake of two months of slower business, resulting from a "wait-and-see" stance adopted by consumers confused over reports on the possibility of lower car prices.

Business analysts, however, had expected a stronger performance in the second half of the year with the Hari Raya promotions, the year-end holiday season and competitively priced new model launches.

The Malaysian Automotive Association (MAA) had maintained its total industry volume (TIV) forecast at 640,000 units for 2013.

According to the MAA, sales rose by 4.1% to 313,488 units between January and June, an increase of 201,269 units compared with the same period a year ago.

Total sales for last year amounted to 627,753, exceeding the forecast of 615,000.

The association attributed the increased sales this year to the country's strong economic growth, supported by strong domestic demand and post-general election spending.

MMA president Datuk Aishah Ahmad said although the rise in the number of cars on the roads contributed to traffic congestion in major cities, it was not the only factor.

"Poor town planning, poor road infrastructure and maintenance are among the others," she said. "Other factors contributing to the problem are weak enforcement of traffic flow and availability of public transport."

Aishah said positive consumer sentiments, stability in the employment market and sources of financing with low interest would continue to help boost vehicle sales in Malaysia.

RHB Research Institute Sdn Bhd analyst Alexander Chia said the recent tightening of rules for mortgage and personal loans (over concerns of rising household debt) had added financing risks to the regulatory ones already faced by the sector.

"While we do not believe a clampdown on auto financing is imminent, the impact, especially on the car segment, could potentially be severe," he said.

"The month-to-month gain reversed two consecutive months of sales declines," he said. "We believe that potential car buyers were somewhat confused by reports over the possibility of lower prices."

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