It’s boom time for automative sector after pandemic slams brakes on sales

The three-month movement control order (MCO) early this year, under which businesses were closed and a nationwide travel restriction saw roads and highways emptied of vehicles, had a natural victim: the automotive industry.

Statistics from the Malaysian Automotive Association (MAA) indicate that passenger vehicles suffered a 41.3% drop in sales in the first half of the year, which saw a near-complete shutdown of businesses at the height of the MCO between March and May.

The total industry volume (TIV) of new passenger vehicles registered in the first half of 2020 was 158,876 units against 270,861 in the corresponding period of 2019, a drop of 111,985.

But the sector has been among the quickest to bounce back since the MCO was eased in June.

As of November 2020, a total of 412,977 passenger vehicles had been sold, a 17.5% drop from 2019 when 500,859 cars were sold.

In April, when authorities got cracking with tough laws to impose the MCO, only 143 units of cars were sold.

This number recovered to 23,309 in May.

In June, 44,695 vehicles were sold on the back of an incentive under Penjana, the government’s Covid-19 rescue package, which gave car buyers sales tax exemption until the end of the year.

Interestingly, MAA said more passenger vehicles were sold this year compared to the corresponding period last year.

In October, 51,795 units were sold compared to 48,987 in the same period last year.

Last month, 51,174 units of passenger vehicles were sold, an increase of about 7% from the same month last year which recorded total sales of 47,753 units.

MAA expects the sales volume of cars in December to continue the upward trend.

Apart from sales tax exemption, other factors which boosted the industry despite an economy ravaged by the pandemic were a string of new model launches and aggressive promotional campaigns.

Those in the industry are not surprised.

Wong Weng Wai of Carlist.my, a popular website that brings together a network of car buyers and sellers, said business has been strong throughout the pandemic.

He said there had been a higher demand for cars in the RM50,000-100,000 price range. And there is not much difference in the demand for new and second-hand cars.

“Both new and used cars have their fair share of demand from Malaysians as they still maintain certain preferences when it comes to choosing a new or used unit,” Wong told MalaysiaNow.

With the government announcing an extension of the sales tax exemption period to June 30, analysts are expecting a boom in car sales in the coming year.