WE all know that 2020 has been a challenging year for the world. Here in Malaysia, it has been equally challenging for many sectors of the economy. This month we can see that 2021 might not be any better in the first few months.
Demand
The automotive sector was given a boost at the start of the third quarter when the Malaysian government announced a sales tax discount. This tax discount gave the necessary thrust to the automotive segment.
Vehicle sales jumped as many Malaysians who did not need a new car opted to trade in their good running condition vehicle for a brand new car that came with a discount. Then there was another group of Malaysians who decided it was time to cash in their Employees Provident Fund (EPF) savings and get a new car. Finally, there was a group of Malaysians who looked at upgrading their lifestyle with a fun vehicle.
Supply
Yes, sales were great and by early December most premium car showrooms had sold out their stocks.
Some were holding only un-popular models in stock. The middle-class car ownership was rather stagnant as this was where the biggest job losses could be seen. Yes, middle-class Malaysians from the private sector (not government employees) had been hard-hit by the financial downturn.
So, after interviewing many car companies senior executives, it was clear that fully imported cars sold the best. This was because their calculated tax discount was the best and locally assembled cars saw little savings.
Sales
Still, we got the news that Honda Malaysia enjoyed more than 9,500 bookings of their all-new Honda City. Mitsubishi had a healthy 4,500 plus bookings of their latest MPV, the Xpander, and Proton saw 21,000 Malaysians booking the X50 crossover.
So, despite the troubling economy, the rising job losses and the thousands of unemployed new graduates from overseas and local universities – Malaysian car sales were healthy. This has been good news for the many car assembly plants in Malaysia and also the hundreds of car showrooms and their staff.
Next
Will this sales momentum remain for the automotive industry in 2021? In a recent memo to the Malaysian Automotive Association and Malaysian Association of Malay Vehicle Importers and Traders (Pekema), the Malaysian government has confirmed that the programme for discounted Sales and Services Tax would continue until the mid-2021. This memo was later confirmed with a press release from the Ministry of Finance.
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