Slow year for automotive sector following reduced loan approvals
Posted on February 23, 2012, Thursday
HIT HARD: January’s TIV recorded significantly lower growth, with both the passenger and commercial car segments as the BNM implemented new guidelines for loans.
KUCHING: The automotive sector’s total industry volume (TIV) delivered a shock to analysts, sinking 25.3 per cent year-on-year (y-o-y) and 14.2 per cent month-on-month (m-o-m), bogged down by stricter loan approvals guidelines and the repercussions from the Thai flood.
“The passenger segment shrank sharply by 26 per cent y-o-y, led by passenger cars and four-wheel-drives, which fell 30 per cent and 48 per cent y-o-y respectively. The commercial segment was also not spared, posting a 21 per cent y-o-y decline,” OSK Research Sdn Bhd (OSK Research) noted in its research report.
The research house highlighted that Bank Negara Malaysia had recently rolled out new lending guidelines effective January 1, 2012 which was implemented by banks that subject loan approvals to purchasers’ debt service ratio to total net income as opposed to the previously debt service ratio averaging at 70 per cent of gross income.
This was noted to have led to a lot of rejected loan applications from potential vehicle buyers. OSK Research stated that the new guidelines did not only apply to the hire purchase segment but across the board.
“According to Proton Holdings Bhd (Proton) dealers, approvals back in the second half of financial year 2011 were already at a low of 48 per cent, which we estimate may have trended even lower to 30 to 40 per cent in January,” the report added.
Most automotive players did not fare too well in the month of January as Perusahaan Otomobil Kedua Sendirian Bhd (Perodua) continued to retain pole position, sales were down by 11 per cent y-o-y. OSK Research noted that Perodua still fared better than Proton, Toyota, Nissan and Honda which saw sales plunging by 28 per cent, 23 per cent, 28 per cent and 89 per cent respectively.
The report also highlighted recent media reports that the government might be reopening the 1.8-litre vehicle segment. It believed that this might pave the way for the entry of Volkswagen in a bigger way and tap into the mass market as well as other automakers.
Kenanga Investment Bank Bhd (Kenanga Research) was positive on the newsflow, stating that this progress would benefit the industry as a whole, particularly the marques with foreign collaborations such as UMW Holdings Bhd, DRB-Hicom Bhd and Tan Chong Motor Holdings Bhd.
“We understand that currently the government, together with consultants and industry players, are reviewing key aspects pertaining to the sector in its efforts to drive investment in the manufacture of hybrids and electric vehicles and gradually phase out Approved Permits,” OSK Research observed.
It added that the National Automotive Policy was due to be announced in the next two months.
OSK Research maintained a bearish outlook on the sector as it retained its TIV growth forecast of 1.1 per cent of this year as it would be too premature to make any drastic changes in estimates in the first month of the year.
