KUALA LUMPUR, May 21 — Vehicle sales are set to be higher in May and June, boosted temporarily by Hari Raya promotional campaigns, but in the longer run the automotive sector will still be challenged by external and domestic economic uncertainties, says AmBank Research.

Sales would likely be higher during the two-month period on rebates, free gifts and other incentives offered to attract buyers, it said.

“We believe that the promotional campaigns for the festive season in May – June 2019 will be similar to the tax holiday in 2018, providing a temporary boost to vehicle sales.

“This festive period is seen as an opportune time for car manufacturers to clear and reduce their inventory to a healthier level as newer models will be launched in the latter part of 2019 and in 2020,” it said in a note today.

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The research house said challenges remained in spurring consumer spending for big-ticket items such as cars despite a slightly more attractive hire purchase financing rates due to the recent overnight policy rate cut.

“We believe that a stronger growth in vehicle sales will ultimately depend on higher wage growth and improvement in economic conditions to lift households’ confidence levels,” it said.

It noted that both the Malaysian Institute of Economic Research consumer sentiment and employment indices eased for the first quarter of 2019.

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AmBank Research said it looked forward to the anticipated revised National Automotive Policy 2019 (NAP 2019), which is likely to be announced in second quarter 2019.

“The new policy will set the long-term direction of the automotive ecosystem and also provide more clarity on the development of the third national car project,” it said.

According to statistics by the Malaysian Automotive Association (MAA), total industry volume (TIV) dropped 8.8 per cent in April 2019 to 49,964 vehicles from the 54,776 vehicles registered in March.

However, year-on-year, TIV grew 6.2 per cent compared to the 47,047 units that were sold in the previous year’s corresponding period.

For the first four months of the year, TIV sales were higher by 5.97 per cent to 193,028 units, which was 32 per cent of AmBank Research’s full-year sales estimate of 603,000 units and therefore in line with the forecast. — Bernama