Contraction seen in auto sector sales
Consumers cautious amid rising inflation, slower growth
PETALING JAYA: Sales of motor vehicles may have peaked in July, with a slowdown starting last month as consumers turned cautious amid rising inflation, financial volatility and slowing economic growth, analysts said.
Data released by the Malaysian Automotive Association (MAA) yesterday showed that sales volume in August dropped 12.5% to 6,757 units from July.
Sales were lower by about 1% on a year-on-year basis as total industry vehicle (TIV) sales amounted to 47,227 units in August compared with 47,585 in August last year.
MAA said in a brief statement the reasons for the month-on-month sales decline were higher interest rates, a tightening of hire purchase loans and the impact of the fuel price hike.
Workers assemble Perodua cars at its factory in Rawang, outside Kuala Lumpur.
Sales for September could be lower than that for August due to these reasons as well as a shorter working month because of the Hari Raya festive holidays, MAA said.
July was a month of robust growth for the automotive sector as sales grew 10.2% over June, and 20.2% over July last year.
That was then. Since then, disposal income has declined for many people amid stagflation and destruction of wealth in the stock market.
Sales dropped for almost all of the major motor marques, analysts said.
“The surprising situation is that sales of even small cars were slower in August than in July. People thought buyers would switch to small cars from Perodua and Proton for lower fuel consumption but their sales also slowed in August,” an analyst said.
As Perodua and Proton account for about 50% of TIV sales, a decline in their sales in August would cause the TIV sales to drop in the same month. In line with the decline of sales in the national cars, sales of non-national cars also slowed.
Hence, Toyota and Honda also saw slower sales in August month-on-month, but sales of Nissan cars were maintained, the analyst said.
Analysts said July was a month of strong sales as buyers rushed to register their vehicles ahead of an increase in interest rates for hire purchase loans which took effect around end-July.
While that may explain lower sales in August, sales activity was also uninspiring on a year-on-year comparison.
Sales in the automotive sector had fallen for two consecutive years in 2006 and 2007, but started to pick up in the second half last year and first half this year.
The momentum appears to have stalled as sales growth may continue to slow down or contract altogether in subsequent months with motor vehicle data pointing to a general slowdown in consumer spending as economic growth slows.
Source : The star By C.S. TAN