As Malaysians observed the Restricted Movement period, businesses everywhere in the country would face some downturns. The automotive industry is one of the core industries of the country, and the impact of Covid-19 is expected to hit the automotive industry hard as potential customers stayed away from dealerships.
According to local research companies, the impact of Covid-19 on customer sentiment is real which would lead potential buyers to refrain from visiting physical showrooms due to the restricted movement enforcement. Ultimately, this would effect car sales over the three quarters of the year. With reference to the car sales statistics by MAA (Malaysian Automotive Association), sales has dropped by 3 - 5 percent over the first two months of the year. And with the Covid-19 situation, things could only get worse.
Last year, total car sales hit a little over 600,000 units for a 1 percent increase. The final total was 604,287 units. This year, due to slumping sales and Covid-19, the MAA has estimated less than 1 percent growth for the year.
In January 2020, MAA reported a sharp decline of 12 percent in TIV (Total Industry Volume). The final total sales figure for the month was just 42,652 units. Again, MAA said sales would go up in next couple of months. And now, the Covid-19 restricted movement order hits…
With the outlook looking not-so-encouraging, automakers and distributors simply have to woo potential buyers with more attractive campaigns and promotions. In addition, automakers need to introduce more new models in order to make an impact on buyers, once the dust clears.
There’s no doubt that the Covid-19 outbreak has impacted several automotive brands and distributors In Malaysia. Most manufacturers are somewhat effected by supply issues. Major car brands like Proton, Perodua, Hyundai, Mazda, Honda, Toyota and many more have announced temporary stoppage of production in Malaysia and the world over. Production and manufacturing, on the other hand, are also impacted by inactive component supplies, much like a chain effect. However, it is likely to get up to speed again as infrastructure and inventories remain intact, following the clearance in less than 14 days of restricted movement.
The impact of Covid-19 on interest rates
Earlier this month, Malaysia’s Bank Negara cut interest rates from 2,75 to 2.5% for new cars. However, experts said the negative sentiment would likely outweigh lower interest rates, which does not materially impact monthly repayments.
It is a fact that the Covid-19 pandemic is already putting the pressure on automakers that are battling an unprecedented decline before the outbreak. Despite a bleak outlook, manufacturers are still optimistic about potential growth through 2020. Once the storm clears, they expect demand and production to get right back up to speed.