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The Malaysian Automotive Association has revealed its forecast for 2016’s Total Industry Volume (TIV) for vehicle sales. With 2015 marking a record high of 666,674 vehicles registered, the authority believes that there are several factors which will hamper this year’s outcome.

Last year’s (2015) performance was a 0.03% (187 units) improvement on the year before that (2014), which itself saw 666,487 vehicles sold. However, MAA estimates that 2016 will see just 650,000 vehicles move – marking a decline of 2.5% against 2015’s run.

The decline is set to begin in January 2016 itself, with MAA claiming that December 2015’s figures were boosted by excessive year-end offers by car companies. Datuk Aishah Ahmad, president of MAA, said that banks will also continue enforcing more stringent hire purchase loan approvals, which will affect January’s outcome, as well as the rest of the year.

“Individual banks themselves are tightening these processes. Even the loan amount itself, you will not so easily be able to get a 90% loan now, it’s more likely to be 65 to 70% – you’ll have to come up with a bigger downpayment. The repayment period is also being shortened to seven years, and not the nine years as before,” she said.

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The 650,000 TIV estimate consists of 575,250 passenger vehicles and 74,750 commercial vehicles. The dip against 2015’s figures has been pinned on several factors. On top of the stringent hire purchase loan approvals, these include the continuing state of our weak ringgit, subdued global economy growth, the uncertainties surrounding the declining crude oil prices and more.

With the general cost of living in the country also going up, MAA also predicts that consumers may also hold back its expenditures on “big ticket items”. Likewise, lower income groups will be affected by banks being more hesitant to approve loan applications. “The rejection rate (for hire purchase loans) could be as high as 30 to 50%, depending on the credit worthiness of the customer,” Aishah said.

Even still, MAA’s TIV estimation for 2016 is still set to mark the industry’s seventh consecutive year of registering more than 600,000 vehicles. Contributing factors to this positive note include the introduction of several large infrastructure projects, such as the improvement and development of new highways nationwide.

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The automotive authority also believes that strong and competitive promotional campaigns by car companies keen to maintain and grow their market shares will contribute to the industry’s performance in 2016. It also predicts that new-car models will be very exciting this year, which will also contribute to its overall figures.

The Malaysian Automotive Association also provided a brief forecast for years 2017 to 2020. Without precise clarification, the authority believes that the Malaysian automotive industry will continue to grow consistently beyond 2016, at rates between 2.2% to 3.0% each year.

If accurate, the Malaysian TIV for vehicles sold will break the 700,000 mark in 2019, and will continue that high-performing run into year 2020.