MAA seeks revised Open AP details, slashes TIV forecast

PETALING JAYA: The Malaysian Automotive Association (MAA), which has slashed its total industry volume (TIV) forecast by 5% to 650,000 units for 2016 amid a weaker consumer sentiment, said it is looking to get more details on the revised Open Approved Permit (Open AP) system.
President Datuk Aishah Ahmad said the revised Open AP system will not benefit only a small group as the government will consider awarding permits to more people as long as they meet the conditions.
"They (the government) indicated that they want new players. We need to find out from the government the exact details of the new conditions for the Open APs," she told reporters after MAA's media briefing on the market review for 2015 and outlook for 2016.
Following a comprehensive study on the impact of the policy, the government in December last year decided to continue with the Open AP system for used cars, but with several improvements that will be enforced from Jan 1, 2017.
Asked if the Open AP system contradicts the government's goal in encouraging competitiveness and liberalisation in the automotive industry, Aishah said: "I really can't say whether it contradicts or not. It's something that has been decided".
Recall that the government, in an effort to boost bumiputra participation in the local automotive industry, decided to retain the Open AP system despite some quarters calling for its abolishment as it protects the interest of only a selected group of people.
The local automotive industry recorded a flat TIV of 666,674 units in 2015 compared with 666,487 units in 2014. Nevertheless, it is still an all-time high despite the marginal growth.
MAA had in July last year projected a TIV of 683,400 units for 2016.
"We foresee 2016 will be another challenging year," said Aishah.
Registrations of new passenger vehicles rose 0.5% to 591,298 units in 2015 from 588,348 units in 2014. However, registrations of commercial vehicles dropped 3.5% to 75, 376 units from 78,139.
Aishah highlighted that the recent increases in car prices are still unable to mitigate the impact of a weaker ringgit, which has weighed on the costs of imported parts.
"How long can you hold the market share without margins?" she asked.
Aishah said consumer confidence is not as good as before and purchases of big-ticket items are being held back despite aggressive promotional campaigns, with loan rejection rate sas high as 30% to 50% depending on the buyers' credit-worthiness.
Commenting on the Trans-Pacific Partnership Agreement (TPPA), Aishah opined that the pact will neither affect TIV nor the local automotive industry as a whole given that Malaysia does not source vehicles from the TPPA countries.
However, she believes the TPPA will benefit component suppliers as it will open up the global market for them.