The automotive sector is one of those categorised as negatively affected by the sharp drop in the value of the Malaysian ringgit versus the US dollar. While emerging markets across the globe have been hit, the ringgit is Asia’s worst performing currency this year.
The greenback is the main currency that most auto companies – whether Japanese or European brands – trade in. Costs have increased for imported cars and components, but current car prices will be held for as long the car companies can take it, according to Tan Sri Asmat Kamaludin, group chairman of UMW Holdings.
“Unless its absolutely necessary, car companies will not increase prices,” said Asmat, who is also Perodua chairman. This is due to the local car industry being very competitive, he told reporters at the official opening of Perodua Sentral in Petaling Jaya today.
Perodua, despite having a high localisation rate of almost 90% (average across three models – Axia, Myvi, Alza), is also affected by the forex situation as the company imports in USD. “We have been impacted. To give you figures, it’s 2 to 3% of our bottom line (profit before tax) two to three months ago; now (at current rates) it’s 5%,” he revealed.
Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed, who officiated the facility’s opening, said that MITI will engage with the automotive industry and will be meeting with the players to learn more about the issues affecting the sector.
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AI-generated Summary ✨
Comments highlight concerns over Perodua’s profit margins impacted by the Ringgit’s depreciation, with some noting that despite high local content, many parts like airbags and safety features are still imported, raising prices. There is criticism of the government for supporting inflated car prices through protectionist policies and import duties, leading to Malaysians overpaying for vehicles, often at the expense of safety features. Many believe the Ringgit’s drop should not result in price hikes, and some accuse automotive companies of profiting excessively while the public bears the burden. There is frustration over unfulfilled promises to reduce car prices by 30% and criticisms of the industry’s high pricing levels, which they say harm lower-income consumers. Overall, sentiments reflect dissatisfaction with industry practices, government policies, and economic impacts on car affordability.