By Yamin Vong
MANY Malaysian business people think that car sales will get battered this year and that car prices will be discounted by dealers anxious to clear stock.
On the other hand, data from the China Passenger Car Association shows a rebound in car sales — a 15% growth in year-on-year weekly car sales for the week of April 10, the start of the removal of lockdowns.
“Dealers were surprised at how fast consumers have returned to showrooms now that travel restrictions have been eased,” reports Chris Bryant in BloombergOpinion.
“Once stay-at-home orders are lifted, we’ll seek to regain personal autonomy while continuing to shield our families from the virus. It makes sense because people who took a crowded bus or train may feel uncomfortable doing so for a while. A car could feel as essential as wearing a face mask,” he wrote.
Rebutting this, a CEO of an auto franchise holder said that “Malaysia is different. Per capita car ownership is already very high in Malaysia compared to China.
“Also, our household debt is very high. Combined with the loss of jobs and income, there’s going to be much less discretionary income.
“On our point of view as a franchise holder, we already have three months of CKD (completely knocked down) kits sitting in our plants and we have another three months of stock on the way to Malaysia.
“We’re going to enter a year of severe overstock and we hope that the government will do something significant like an End-of-Life Programme.
“The auto industry employs a lot of people — factories, sales, service and logistics,” he said.
According to reports from Reuters and Automotive News Europe website, the German auto industry is readying proposals for a new scrapping programme to counter a sales slump that risks choking off production restarts at factories across Europe’s biggest economy.
“The state premiers of Lower Saxony, Bavaria and Baden-Wuerttemberg, home to Volkswagen, BMW and Daimler, are expected to meet with federal government leaders this coming week.
While Chancellor Angela Merkel’s government has fast-tracked more than 1 trillion euros (US$1.1 tril) directly by fund transfers to businesses to help them through the coronavirus crisis, calls to hand more taxpayer money to the automotive industry have stoked political controversy.
“A key sticking point is how sizable the state aid should be, given that the car giants raked in billions of euros in profits last year. And while industry executives would like to see the stimulus apply to all new models, the government may limit aid to just the cleanest car,” said Automotive News Europe.
New incentives will not look like the scrapping programme that boosted auto sales during the financial crisis, Economy Minister Peter Altmaier said Wednesday in Berlin. Instead, measures should be ‘ecologically sustainable’ and help reduce carbon dioxide emissions, he said
VW and Daimler last week urged the German government to help boost demand for cars as the coronavirus pandemic hammered first-quarter profits and forced both automakers to drop their outlooks for the year.
“We need a swift decision on buyer incentives,” VW’s chief financial officer Frank Witter said, echoing Daimler CEO Ola Kellenius who also called for the swift introduction of broad measures to rekindle demand for cars.
“A simple incentive would be effective,” Kallenius said on a call to discuss Daimler’s earnings.
Any incentive should help cut carbon dioxide emissions by taking older cars off the road, VW’s Witter said, adding that the automaker’s new electric car, the ID3, is on track for launch this summer.
VW works-council chief Bernd Osterloh gave a first glimpse of how a new programme could look in a letter he sent to employees on Wednesday.
Germany’s vehicle tax should be designed to encourage purchases of fuel-efficient cars, and any additional tax revenue could be used to build more electric charging stations, he said, according to the letter seen by Bloomberg.
Additionally, the government could prepare a scrapping programme for older vehicles, with support restricted to cars that meet the latest Euro 6d temp emissions rules.
All major German automakers would support such plans and could consider doubling the buying incentives, according to the letter. Manufacturers would also grant options to test-drive electric cars for 14 days in 2021 for free.
There are at least two Malaysian automotive franchise holders who are lobbying for a voluntary End-of-Life car scrapping programme.
The president of the Federation of Motor and Credit Companies Association of Malaysia, Datuk Tony Khor, says a voluntary end-of-life programme could start with a voucher of say, RM3,000, in exchange for each clunker that’s scrapped by the registered owner.
This voucher is transferable for the purchase of any locally-assembled car, new or second-hand. In this context the voucher is presented for redemption by the government via a cash-for-clunkers fund especially to kickstart one economic sector during the pandemic. — May 5, 2020
