Not surprisingly, new vehicle sales dropped in February, which is usually the case as it is the shortest month of the year. And this year, it was even shorter with the Chinese New Year festival falling at the start of the month and people taking days off.
9% drop in 2018, 18% drop in 2019
Last year, the drop was 9% or almost 4,000 units from January’s Total Industry Volume (TIV). This year, it’s double that number as the difference was 18% or 8,612 units. This dropped the TIV for February to 39,838 units, compared to 48,450 units in January. And compared to the TIV in February 2018, the difference is 2% lower this year too.
Last year, even though the first quarter was the period before the General Elections, sales remained steady although the start of the second quarter did see a decline which suddenly turned around with the GST exemption for three months.
Stocks available but deliveries held back
At this time, the sales numbers may not be providing a true picture of market conditions due. There’s a backlog of orders not just due to high demand for certain new models but also because of the delays in confirming incentives for models assembled locally so that their pricing can be computed. Some companies are experiencing many months of waiting, which obviously angers their customers who may even have had to dispose of their existing car to provide the downpayment on the new car and they still can’t get it.
In the next month’s figures, we may see a sudden surge but this may be simply due to a company or two having obtained the incentive approval and can then settle the tax payable, register the vehicles and deliver them. In this case, the vehicles have been sitting in the stockyards for months and would be sent to dealerships as quickly as possible.
How fast the market will recover remains to be seen. The Malaysian market is an ‘abnormal’ one which doesn’t follow normal market behaviour as it is influenced heavily by government policies. Incentives to assemble locally are crucial to the companies to help them offset their production costs so pricing can be competitive. And yet, with the government having to be careful about expenditure, giving incentives must be more carefully reviewed.
The Malaysian Automotive Association (MAA) is not upbeat about the market for 2019, expecting that the tax holiday in the middle of 2018 may have seen many people buying new vehicles earlier than planned (because of the big savings). This would mean that there would be less buyers in 2019 so the market will be stagnant. In fact, the association has forecast of growth of just 0.21% to 600,000 units.