Car price increase inevitable as sales to dip in 2016, automotive association says

PETALING JAYA, Jan 21 — Vehicle prices will likely go up this year with sales expected to dip as the ringgit continues to stay weak, the Malaysian Automotive Association (MAA) said today.

Its president Datuk Aishah Ahmad said today that distributors kept prices low in 2015, which saw an increase in sales compared to 2014, but added that it was only a matter of time when profit margins become unsustainable.

“Some [of our members] have already announced their increase. It’s inevitable. Once the existing stock depletes, then you have to increase prices. There’s no way you can hold on to existing prices when your margins are eroded,” she told a press conference at the MAA office here.

“It’s either market share or profits. How long can you go for market share without having any profits?

She said that Total Industry Volume (TIV) increased by 0.03 per cent last year compared to 2014, but the association forecasts a drop of 2.5 per cent this year.

“The persistent weak ringgit will continue to affect business confidence and consumer sentiment,” she said, adding that it was also predicted that consumers will only spend moderately this year due to economic uncertainties and inflationary pressures.

The MAA’s review of 2015 saw local carmaker Perodua maintaining its top spot in terms of market share, increasing from 29.3 per cent  to 32 per cent even as Proton saw a decline from 17.4 per cent to 15.3 per cent though the national carmaker hung on to its second position.

Aishah said TIV had dipped ahead of the implementation of the Goods and Services Tax in April, 2015, but picked back up in August, with December being the being the highest recorded monthly TIV achieved in the history of the Malaysian automotive industry with 69,401 vehicles sold.

The total vehicles sold in 2015 was 666,674, which was 187 units more than 2014.

Honda Malaysia had announced its increased car prices by 2 per cent to 3 per cent this month, while UMW Toyota Motor had also announced that it too will hike the prices of its Toyota and Lexus brands by 4 per cent to 16 per cent this month onwards.

Proton CEO Datuk Harith Abdullah had last week also hinted at the possibility of price increases of its vehicles after Chinese New Year next month, with the weak ringgit taking a toll on its imported parts, which make up 20 to 30 per cent of its vehicles.