MAA projects 1.7% growth for 2017

PETALING JAYA: The Malaysian Automotive Association (MAA) has forecast a total industry volume (TIV) of 590,000 units for 2017 (a 1.7% growth from 2016) after six years of consecutive TIV growth due to the moderating economy, lower consumer spending and cautious business sentiment.
President Datuk Aishah Ahmad said the TIV forecast considered factors like the challenging global economic environment, the depreciation of the ringgit, continuation of stringent approvals on hire purchase by banks, the popular usage of Uber and Grab services, moderation in consumers’ spending, introduction of new models at competitive prices and continuation of promotional campaigns by car companies.
“1.7% is a small growth. We’re hoping that the industry will be better, the economy will improve slightly and maybe Bank Negara Malaysia will be less stringent in terms of hire purchase. 1.7% is ‘nothing’ to us. We’ve seen double-digit growth,” she said at a press conference to announce the market review for 2016 and outlook for 2017 yesterday.
TIV fell below the 600,000 mark in 2016, the first in six years, dropping 13% or 86,553 units, to 580,124 units. The last time the TIV was below the 600,000 mark was in 2009 (536,905 units). However, Aishah said the automotive market fared worse in 1998 during the Asian financial crisis, where it dropped 65%-68%.
She said the automotive market in 2016 was consistently lower than 2015 despite plenty of activities (car launches) by auto companies as they tried to shore up their numbers. This could be attributed mainly to slowdown in the economy, which impinged on consumer sentiments and business confidence. As a result, consumers and businesses were wary of purchasing big-ticket items such as new motor vehicles.
The TIV achieved in 2016 was however in line with MAA’s revised forecast of 580,000 units announced in July 2016. The highest monthly sales achieved in 2016 was in December due to the aggressive efforts by auto players and heavy discounting and offers given by car companies to clear stocks and retain market share.
“Auto industry is always cyclical. After six to nine years, there will be a downturn. When the economy improves, it will also improve. We’ve been here long enough and we’ve seen the cycles,” said Aishah, adding that the market will correct itself after a downturn, but it will take a bit of time.
MAA reiterated its concern on the B10 biodiesel implementation where many of its principals are unable to provide warranties for vehicles.
“We’ve asked them (government) to implement Euro 5 diesel, which means you don’t need to have a B10. If there are more stations throughout the country that have Euro 5 diesel, customers will have the choice to fuel up with Euro 5, where you don’t need to comply with B10,” explained Aishah.