PETALING JAYA: The Malaysian Automotive Association (MAA) has pared down its total industry volume (TIV) forecast to 500,000 units for 2021, a 5.6% contraction from last year’s TIV of 529,434 units.
At the start of the year, it projected a TIV growth of 8% year-on-year (y-o-y) to 570,000 units but then revised the forecast due to the lockdown and the Covid-19 situation which halted sales and production activities of the sector.
“The 500,000 units TIV forecast for 2021 is based on the assumption that we will be allowed to operate in August, if not our forecast will have to be revised again,” MAA president Datuk Aishah Ahmad (pix) told the media during its virtual briefing today.
This year it projected passenger vehicle sales to reach 454,000 units compared to an initial forecast of 513,000 units while commercial vehicles are expected to reach 46,000 units against the earlier estimate of 57,000 units.
Aishah said the biggest worry for the sector is the uncertainty over the reopening of their showrooms and factories for the production of vehicles.
The MAA president highlighted that a lot of the smaller car dealerships are facing a cash flow crunch, as they still have rental and salary commitments to fulfil despite the lack of income.
While the situation differs from dealer to dealer, she said, many MAA members have run out of cash to sustain their dealership and will have to close shop if the restrictions continue for another month. However, the bigger dealerships have said they can sustain business up to October.
“If the closure of sales and production continues, we have to close shop and be forced to retrench,” Aishah warned.
“We have sent several appeals to the government, highlighting the importance to allow our sales and assembly operations to continue to resume with strict control even if it is not 100% capacity but maybe up to 60% of the ability of the staff to operate in the showrooms and factories as well.”
The only positives for the sector are the sales and service tax exemption (SST) and the orders that have been coming in, she said, adding, however, that the restrictions must be eased to allow the delivery of those orders.
Besides the halt in operations, Aishah said, the automotive industry has to contend with the global chip shortage which has affected various brands. For the next three to four months, the industry expects the chip shortage to persist as it is not able to secure supplies from overseas which will dampen sales as it cannot obtain the stock it needs.
“We are hoping the situation will improve by the third quarter of this year but how long will this situation remain we are not sure.”
Moving forward, Aishah said the SST exemption should be extended given the zero sales registered by the industry during the movement control order (MCO) period this year. If the situation continues, the dealers will not able to deliver even if they have orders.
“We plead to the government to extend the SST exemption, maybe for another six months after its expiry at the end of this year, should the MCO situation persist.”
For the first half of 2021, the association reported a 43.6% increase y-o-y in TIV of 249,129 units against the corresponding period of the previous year attributed to the low base effect given the lockdown introduced last year to curb the spread of Covid-19.
It pointed out the monthly sales for the first six month of this year have been affected by the imposition of various MCOs. With the exception of January and June 2021, y-o-y sales were consistently higher in the first half of the year.
The latest figures saw TIV plummet by 95.7% to 1,921 units in June from 44,755 units in the same month of the previous year, attributed to a total nationwide lockdown.