Are Malaysians willing to starve just to fulfil their dream of owning a car?

ONE wonders if the existing state of public transportation system in the country is so pathetic that Malaysians have to starve to own a car to get from point A to point B.

Or this is just a case of preference, true to the local adage that Malaysians like to show off to the extent that owning a car is a necessity even if that will burn a big hole in their pockets.

Despite 2023 being touted as a year where economic hardship would rear its ugly head amid a global recession, Kenanga Research has projected total industry volume (TIV) of vehicle sale in Malaysia to hit 690,000 units or 2% above the estimated 680,000 for 2022.

The research house’s projection is more upbeat than the forecast of 636,000 by the Malaysian Automotive Association (MAA).

“We believe the odds are in favour of MAA raising its number along the way,” opined analyst Wan Mustaqim Wan Ab Aziz in its “overweight” automotive sector update.

“The vehicle sales in 2023 will be driven by the continued delivery of order backlogs to the tune of 350,000 units (as of end-October 2022) which was unchanged compared to three months ago, indicating that deliveries had been replenished with strong new bookings especially for attractive new models even in the absence the SST (sales and service tax) exemption.”

Additionally, Kenanga Research expects vehicle sales to be supported by launches of new battery electric vehicles (BEVs) which will enjoy SST exemption and other EV facilities incentives up to 2023 for CBU (completely built-up) and 2025 for CKD (completely knocked-down).

“We believe vehicle sales will remain robust in 2023 supported by (i) the re-opening of the economy, (ii) financial assistance to the low-income group and subsidies on fuels, electricity and selected food items to keep the cost of living in check, (iii) a relatively stable job market; and (iv) healthy household balance sheets of the M40 group,” justified the research house.

Moreover, Kenanga Research is unperturbed by the impact of the rising interest rates on vehicle sales.

Assuming Bank Negara Malaysia is to raise the overnight policy rate (OPR) by another 25 basis points (bps) to 3.00% in January 2023 – taking the total OPR hike for 2022 and 2023 to a total of 125 bps (from 1.75% to 3.00%) – this will only raise the monthly instalment, for say a Perodua MyVi AV priced at RM60,000 (90% financing margin, five-year tenure), by about “6% from RM978 to RM1,035.

“We also note that the actual interest rates charged vary based on term, financiers, car models, individuals credit score, and newer popular models are most likely be charged a lower effective interest rate range,” added the research house. – Dec 29, 2022

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