production trend Archives

July new vehicle sales higher but nowhere near normal levels

As expected, new vehicle sales in July 2021 were way down, though not as rock-bottom as June when the Total Industry Volume (TIV) was under 2,000 units. As in June, the continued closure of showrooms meant that no sales could be conducted and even if they could, registering the vehicles would not be possible. However, July’s TIV was 270% or 5,465 units higher as showrooms could operate in Sabah and Sarawak so sales were possible there and accounted for the higher numbers.

Minimal bookings from online channels
According to the Malaysian Automotive Association (MAA), which has been compiling data since the 1960s, members reported that bookings via online channels were minimal. These ‘virtual showrooms’ started to appear over the past year as stricter SOPs were in force and there was also concern that customers might not be comfortable coming to showrooms. Customers can make bookings and make payments via online transfers to at least start the process. However, there are still the other things like loan applications which still need some personal interaction.

The cumulative TIV after 7 months reached 256,215 units this year, which was about 10% higher than for the same period in 2020 – and this has been with 2 months of virtually no sales. With sales resuming from mid-August, there will be a backlog to clear plus new orders so the TIV by year-end might still be higher than for 2020.

3-digit production figures
On the production side, the assembly plants have had to suspend operations too and the output fell to three digits in June but rose again in July. The disruption has been challenging for the plants which very much prefer consistent assembly. The shortage of microchips is also slowing output and as the end of the year nears, pressure will be on to deliver as many vehicles as possible because car companies are using the sales tax exemption as a selling point. It expires at the end of this year so many will want to make sure they can enjoy those savings.

Will sales pick up again?
Looking ahead, the MAA expects August sales to be better although there are only two weeks to the end of the month for sales. Furthermore, given the current situation in the country, not only with the pandemic but also the political situation, consumer sentiment may be cautious, and people will be reluctant to spend a lot.

According to MAA President, Datuk Aishah Ahmad, total losses for the local auto industry for the months of June and July have been estimated to be more than RM14 billion. “This is just only from sales of vehicles in the domestic market. Our members also lost much in terms of revenue from exports of vehicles and components, and sales of spare parts locally. All in all, these losses had been very substantial and unprecedented”, she said.

Car showrooms, accessory stores and carwash centres can resume operations from August 16

New Vehicle Sales And Production Summary For October 2020

*Source: Monthly reports of Malaysian Automotive Association (MAA)*

♦ The upward trend seems to have flattened out with October’s Total Industry Volume (TIV) less than 1% higher (226 units) than the TIV for September. No doubt, the reduction in the cost of buying a new vehicle due to the government’s Sales Tax exemption incentive still helps encourage sales and when compared to the same month in 2019, this year was 5.2% better.

♦ The TIV for the period from January to October has almost reached 400,000 units, reached 398,159 units to be exact. With two months remaining to hit the MAA’s 470,000-unit forecast for 2020, can the monthly TIV for November and December average 36,000 units? Since July, it has been above 50,000 units.

♦ Of the 56,670 units registered, 86% were passenger vehicles (excluding pick-up trucks).

♦ The output from the plants rose more substantially to 58,631 units in October to meet the higher demand and to also build up stocks for the end of the year period. It is likely that December will see a rush to take delivery so as to enjoy the sales tax exemption, This would be unusual as many customers often want to defer to the new year.

♦ One thing that could dampen sales a bit would be the uncertainty surrounding the COVID-19 pandemic. While the government is reluctant to impose a full-scale MCO like what we had in March and April when businesses had to shut down completely, there may be areas where stricter conditions are imposed, especially in the Klang Valley where there is the largest number of vehicles sales.

♦ The MAA does expect some softening of the market in the light of a broader impostion of the CMCO and says that members have reported a slowdown in showroom traffic. Nevertheless, many companies now have online facilities for customers to know more about products and then make bookings as well, so at least the initial phase of transactions has been addressed in the ‘new normal’.

Summary of new vehicle sales and production in February 2020

KEY POINTS:

♦ Although the Total Industry Volume (TIV) for the month – 40,403 units – was higher (by 1.5%) than the same month in 2019, it was 5.3% or 2,249 units lower than the figure reported for the month of January 2020.

♦ The total sales of new passenger vehicles was 36,702 units (about the same as last year) while commercial vehicles, including pick-up trucks, was 3,701 units (20% higher than February 2019).

♦ The decline in sales was attributed to delays in launches of new models and consumer concerns about the COVID-19 pandemic which showed signs of worsening.

♦ The Malaysian Automotive Association, which has been compiling data since the 1960, expects that March sales will be lower as the Movement Control Order came into effect around the middle of the month.

♦ Production of new vehicles dipped 11.1% after the upswing in January. As demand could be seen to be slowing down, many companies would have cut output to avoid building up too many stocks.

♦ The total output of 40,371 units during February 2020 was 17% lower than that of the same month in 2019.

Piston.my