Malaysia Car Market Down in July Due to Festive Holidays

So said Malaysia Automotive Association (MAA) but Analysts says otherwise. Malaysia’s slowing economy and rising cost of living  continue to keep the consumer sentiment remains illusive and volume uptick prospect is in doubt despite discount offers.

KUALA LUMPUR (NewsRise) – After a big slump in July, Malaysia’s vehicle sales are expected to modestly rebound in the months ahead helped by new model launches and attractive promotional offers.

Still, analysts doubt prospects of any sharp volume uptick even as carmakers slash prices at the expense of profit margin amid a slowing economy and rising cost of living that continue to keep the consumer sentiment depressed.

“We believe the lackluster demand would improve, led by several recent model launches,” said Kenanga Investment Bank analyst Clement Chua. But, a slower-than-expected recovery in consumer sentiment could drag this year’s total industry volume to a seven-year low, he said.

Chua has cut Malaysia’s vehicle sales forecast by 8% to 570,000 units, the lowest since 2009, following the release of July’s sales data. That compares to 2015’s volume of 666,674 units reported by the Malaysian Automotive Association, and the trade group’s forecast of 580,000 units for this year.

Vehicle sales in Malaysia plunged 28% year-on-year in July and was down 26% when compared to June, according to the association also known as MAA. The latest data show the year-to-date volume at 317,930 units fell 17% in the same period of 2015.

MAA, which represents more than a dozen of manufacturers, importers and retailers, blamed the sharp decline in July due to festive holidays that cut short the working days of the month.

For MIDF Amanah Investment Bank analyst Hafriz Hezry, July’s data suggests a weak underlying demand that goes beyond typical seasonal weakness. “The magnitude of the decline in July 2016 is pretty significant,” he said.

“Although there is a strong pipeline of new models and abundant discounts and promotions,” UOB Kay Hian said in a note, “there is downside risk due to the subdued macroeconomic environment on the back of rising living costs, gloomy job prospects and tepid wage growth.”

Malaysia’s economy expanded 4.0% between April and June, the fifth straight quarter of decelerating growth, compared to 4.2% in the first three months of the year. This year, the third-largest Southeast Asian economy will expand between 4.0% and 4.5%, according to government forecast.

Consumer confidence remains “elusive” in the second quarter of the year, said the Malaysian Institute of Economic Research. The consumer sentiment index, compiled by the partially government-funded think tank, rose 5.6 points from a quarter earlier but remained below the “threshold level of optimism” amid growing worries over higher prices. – NikkeiAsianReview

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