Govt to revise Hire Purchase Act

SOURCE

 PETALING JAYA: The Government has agreed to revise the recently amended Hire Purchase Act 1967 (HPA) following the brouhaha it created since its implementation barely two months earlier.

Following a meeting with the Domestic Trade, Cooperatives and Consumerism Ministry yesterday, the Malaysian Automotive Association (MAA) said the bulk of the amendments that were made to the HPA would be revised.

“The meeting went well. Most of the MAA’s requests were accommodated,” its president Datuk Aishah Ahmad told StarBiz when contacted yesterday.

“The changes will now make it easier for registrations and will take effect immediately. The Government will issue a circular on the changes next week,” she said.

The MAA earlier this month said local automotive players were not consulted over the amendments to the HPA which took effect on June 15.

Since its implementation, automotive players had been complaining that the Act had created confusion and delayed the car-buying process.

Aishah clarified that the new revision by the Government did not mean that the HPA would revert to its pre-June 15 amendment status.

“Some clauses will be amended while others will remain. Simply put, it makes car registrations easier.”

Among the contended issues when the amended HPA was implemented last month was the 1% maximum booking fee (based on the total selling price) which required car sellers to refund customers 90% of the booking fee if the deal were to fall through.

This meant that car sellers or dealers could not accept booking fees before the car buyer is served with a Second Schedule notice.

The Second Schedule notice can only be completed and served, in practice, on the car buyer usually after the hire-purchase loan application is approved.

The remaining 9% downpayment on the car can only be paid when the hire-purchase agreement has been prepared, with details such as the car’s chassis number included.

This meant the hire-purchase agreement can only be prepared after the actual car unit has been allocated to the dealership.

The Star: News

Monday, June 27, 2011 8:39 AM

Demand for luxury cars remains strong

(Click title for source)

By EUGENE MAHALINGAM

PETALING JAYA: Demand for luxury vehicles in May continued to rise despite a decline in total industry volume (TIV) that month.

Sales of Volkswagen vehicles rose the most last month, jumping 325% to 455 units from 107 units a year earlier, according to data from the Malaysian Automotive Association (MAA).

For the five-month period ended May, sales of Volkswagen cars surged 341% to 2,057 units from 466 units a year earlier.

Within the luxury segment, sales of Mercedes-Benz vehicles was the highest in May at 541 units, which was a 19% increase from 455 units a year earlier.

During the period under review, Mercedes-Benz vehicle sales increased 13% to 2,278 units from 2,023 units in the previous corresponding period.

Sales of BMW vehicles meanwhile increased 38% to 443 units from 322 units a year earlier, while the German marque's five-month sales rose 30% to 2,029 units from 1,564 units in the previous corresponding period.

MAA president Datuk Aishah Ahmad said consumer sentiment for luxury cars was still strong, and that TIV, especially luxury makes, had been affected by the earthquake that hit Japan in March.

“The economy is still strong. Most of the luxury cars are from Europe and not affected by the Japanese tsunami. The demand (for luxury cars) is still there,” she said in a StarBiz report.

An analyst from a local bank-backed brokerage concurred.

“If not for the production disruption, TIV would not be affected and total vehicle sales in all segments would be registering good growth and not just the luxury segment.”

Total vehicle sales fell 9.5% in May to 46,045 units from 50,883 a year earlier due to a shortfall in production for the month of April.

This was a result of insufficient supply to cater to deliveries stemming from the impact of the earthquake and tsunami that hit Japan in March.

The drop in sales marked the biggest decline of the year since February when local vehicle sales fell to 40,387 units from 40,654 in January.

However, for the five-month period ended May, cumulative sales were still higher at 255,413 units from 247,110 in the previous corresponding period

Total vehicle production in May fell 20% to 38,909 units from 48,845 a year earlier.

Production for the five-month period fell 4.5% to 230,676 units from 241,658 in the previous corresponding period.

Analysts and industry observers are already revising downwards their TIV outlook for the year, in light of the disruption in vehicle production as a result of the Japanese disaster.

Earlier this year, MAA had forecast that TIV for 2011 would hit an all-time high of 618,000 units.

Total vehicle sales in Malaysia grew 13% to hit an all-time high of 605,156 units last year, surpassing the previous record of 552,316 units achieved in 2005.
 

Ministry to meet car industry reps on HP Act

The Star: Friday, June 24, 2011

SOURCE: 

KUALA LUMPUR: The Domestic Trade, Cooperatives and Consumerism Ministry will be meeting financial institutions and used car industry representatives to discuss issues on vehicle sales, resulting from the recently amended Hire-Purchase Act 1967.

Minister Datuk Seri Ismail Sabri Yaakob said he had instructed the ministry's legal and enforcement departments to do so.

Ismail

Regarding complaints of a slowdown in car sales since the amended Act took effect on June 15, Ismail said, “We will need to look at the causes of the problem.”

He reiterated that the Act was amended to protect the interests of consumers.

“Of course, with the amended Act, the documentation process (by financial institutions and vehicle dealerships) is more troublesome and takes more time,” Ismail said yesterday after officiating at a function concerning the Government's Tukar (transform) initiative, aimed at helping traditional sundry shops stay competitive.

To recap, car marque franchise holders and dealers contacted by StarBiz recently said they were worried about the possibility of trickling cashflow, a rise in booking cancellations and longer lead-time for completion of sales resulting from the amended Act.

Malaysian Automotive Association president Datuk Aishah Ahmad said on Wednesday that the amended Act had definitely impacted car sales and there were “teething” problems in the vehicle retail trade.

The Proton Edar Dealers Association Malaysia and Federation of Motor and Credit Companies Association of Malaysia have urged the Government to defer and review the amendments to the Act.

Record 600,000 vehicles join the traffic

Record 600,000 vehicles join the traffic


BERNAMA/The Star Motoring: Wednesday, January 19, 2011 4:10 PM

PETALING JAYA:  Motor vehicle sales breached an all-time high of 605,156 units, up 12.7 per cent or 68,251 units last year vis-a-vis 536,905 units in 2009, said Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad.

The 2010 Total Industry Volume (TIV) surpassed the 2009 record of 552,316 units achieved in 2005, she told reporters after releasing the 2010 production and sales figures and outlook for 2011.

She said the industry volume is expected to grow this year by 2.1 per cent or 1,438 units to 618,000 units from 605,156 units last year.

"I must say, bearing in mind that we have a population of 27 million people, and in terms of motorisation rate we have a ratio of every four person to one car which is the same as a developed country although we are still a developing nation.

"There will be a multiplier effect from the 10th Malaysia Plan and Economic Transformation Programme's projects which would likely give a further boost to the domestic economy and create greater demand for new vehicles," she said.

However, she predicted that sales would be flat in later years.

"Minimal growth is expected to happen for the next few years and I don't think a double-digit growth like last year will happen.

"The country is already very high in terms of car ownership and the forecast has taken into account the previous revamp of the repayment period five years ago.

"Finance companies have changed the repayment period from five years to nine years, and by 2011, consumers will still have four more years of their loan to pay for their five-year-old vehicle, and we have to take into account the financial standing of consumers whether they can afford to trade in and get a new car," she said.

Aishah said the association expects the TIV to grow by one per cent to 624,000 units in 2012, 2013 to grow by 1.1 per cent to 631,000 and subsequently 2014 to grow by 1.2 per cent to 639,000 units and 2015 with 1.3 per cent growth to 647,000 units.

Frost & Sullivan, in its annual automotive outlook briefing recently, was more optimistic than MAA, predicting a higher TIV of 623,000 units this year, driven by a moderate economic outlook and additional new vehicle models which would attract consumers.

 -Bernama / The Star Online.

SOURCE:
http://www.star-motoring.com/News/2011/Over-600,000-cars-sold,-that-s-a-record-high.aspx

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ARTICLE: Revving it up

The Star: Saturday November 6, 2010

Revving it up

By JAGDEV SINGH SIDHU
jagdev@thestar.com.my

New vehicle sales may hit a record this year but key issues remain unresolved

The country’s car industry is poised for record sales this year and with the changes brought about by the revision of the National Automotive Policy to set the industry on liberalised mode, the pace is set to quicken.
Galvanising the industry further are the fresh moves to abolish taxes and excise duties for hybrid and electric cars and motorcycles to push the green agenda on high gear.

Even so, there are many other key developments set to emerge on the forefront which could further alter the industry landscape. They include the government-led initiative for a Proton-Perodua merger, the issuance of more manufacturing licences in the country and the much-hyped about entry of Volkswagen to assemble cars in Malaysia.

Meanwhile, auto players are basking in the possibility of seeing a record year in terms of new vehicle sales.
“The main reason for this growth in sales is a result of the strong economy in Malaysia, which emerged from a “V” shaped recovery,’’ says UMW Toyota Motor president Kuah Kock Heng.

Naza Group’s SM Nasarudin says the new licences will boost competition.

 

“New model offerings, reasonable interest rates that make car ownership relatively affordable and a young population with a strong desire to own a car – all these factors combine will make 2010 a record breaking year,” says Kuah.

According to Frost & Sullivan consultant Ahmad Faridz Dzulkarnain, growth in the first half of this year was largely driven by strong sales of MPVs (multi-purpose vehicles).
In this segment, the big numbers came from Perodua Alza and the Proton Exora which has led to a rise of 80% sales year-on-year.

Ahmad expects the growth rate to maintained for the remaining months of 2010, albeit at a slower rate compared to the first half of the year.

The supporting factors for rising sales include the launch of Proton Inspira this month, year-end festivity and the price reduction of hybrid vehicles.

“Moving forward, we hope consumers look for vehicles that are both more cost efficient as well as environmentally conscious. Awareness of the capabilities of automotive technologies today and the need to take pre-emptive steps to address global challenges such as sustainability will become more prevalent,” says BMW Group Malaysia managing director Geoffrey Briscoe.

MAA’s Aishah ... ‘Fuel quality should keep up with global trends.’

 

Budget 2011 which was unveiled not too long ago had included the abolishment of taxes for hybrid and electric cars for one year from a tax cut in the previous budget. Still, this is too short a period, says Malaysian Automobile Association president Datuk Aishah Ahmad.

“The validity duration should be at least 3 years for better business planning purpose,” she opines, addings that the incentives should not be limited to certain engine capacity only (2.0 litre and below).

“It should be given to all engine size.”

New auto licences

A key development that could potentially alter the industry landscape further is the awarding of new manufacturing licences issued by the International Trade and Industry Ministry.

As it stands now, Berjaya group has received a licence to manufacture commercial vehicles, hybrid cars, electric cars and luxury passenger vehicles in Malaysia.

UMW’s Kuah says Malaysia needs to do more to develop the component makers.

 

Although the licence does not grant Berjaya the permit to make cars under 1,800cc and below RM150,000 per unit, which represents a huge segment, it still is a milestone for the company.
Following this, Berjaya, which currently contracts out the assembly of vehicles, will now be allowed to conduct assembly on its own in a single plant. This will enable it to reduce costs through higher economies of scale in the long run.

In line with this, the company plans to assemble other makes of Mazda, beyond the Mazda 3, throwing in commercial vehicles into the mix as well.

The new licence is a signal that the Government is open to allowing more players in the commercial vehicle market, which Aishah says will heighten competition as brands from China would likely make inroads into the Malaysian market.

“There could be some rationalisation of existing assembly plants producing commercial vehicles in terms of production mix between commercial and passenger vehicles,” she says.

Protectionist – or not?

While many deem the government’s reluctance to allow car makers to penetrate into the national car segment as protectionist, Naza Group of Companies Joint Group executive chairman SM Nasarudin SM Nasimuddin still believes the new licences will enhance competition among the existing players, ultimately benefiting the industry and consumers.

Briscoe echoes this sentiment: “The introduction of new manufacturer’s licences will inevitably encourage greater investment into the Malaysian car industry by foreign producers and also aid in developing a more competitive industry, both of which are likely to have significant benefits to the Malaysian consumer.”
But market observers are not jumping to such conclusions – just yet at least.

They say for global car makers to be drawn into the Malaysian market, they will first need to assess if there is sufficient volume to justify committing considerable sums to build a full-fledged manufacturing plant in the country.

Without the right to dip into the segment long ring-fenced for the national car makers, which still accounts for the lion’s share of the market, the case for volume could be a little harder to make.

Lest we forget, neighbour Thailand has long been benefiting from the protectionist policies of Malaysia to grow their own car industry which includes component makers.

Any policy measures in Malaysia to woo foreign car makers will be benchmarked against the successful steps Thailand has taken thus far towards that end.

Even though the new licences may not allow new competition in the below 1,800cc segment, assemblers in the country have already ramped up their CKD (completely knocked down) operations in the country in accordance with the tax reduction brought about by the revision of the NAP.

Still, Kuah says the market for vehicles with an engine capacity greater than 1,800cc remains small as in 2009, it was only 6% or 23,178 units of 407,005 cars sold.

“Therefore, if there is an increase in the number of players for 1,800cc and above vehicle, it will be very crowded. Even today, there are far more active players than compared to five years ago,” he says.

Gearing up for green

Despite the limitations of any manufacturing licence in the country, Ahmad says the presence of new players will no doubt provide long-term benefits to the industry.

He says new manufacturers will offer consumers choice and existing players need to remain competitive to deliver better products to consumers.

“Consumers will also be able to purchase locally-assembled hybrids, electric cars and luxury segment vehicles at relatively cheaper prices – hence better penetration rate of these segments are expected,” he says.
For the industry and country, the new licences will be basically for green vehicles and commercial vehicles which could lead to increased sales and investments by the industry.

The industry is still new and this segment would also see direct competition from Thailand which has its own eco-car development. Toyota will be assembling its best selling Prius in Thailand from this month due to the strong yen.

Just never enough

While the granting of licences is a first step, market participants feel more is needed to liberalise the sector to woo investments into the country.

“We certainly need to have policies that can compete with our neighbours in terms of attracting new investments. As the largest passenger car market in the region, we have a very attractive market and if our policies are competitive, we will see more investments coming in,” says Nasarudin.

Edaran Tan Chong Motor Sdn Bhd executive director Datuk Dr Ang Bon Beng says the industry cannot depend on domestic market alone to achieve strong growth.  “It is imperative to have a level playing ground for all auto players where survival and success are based on competitive edge, in order to prepare one for regional expansion,” he adds.

Market observers say the industry, which saw existing companies increase assembly of cars in the country from lower taxes imposed on CKD operations, would be open to even more cars coming from Japan and Korea from 2015 onwards once Free Trade Agreements between Malaysia and Asean come into effect in the future.

Aishah says that in the absence of a level playing field in Malaysia, global automotive players have been making their presence felt though contract assembly of their models in Malaysia, shying away instead from direct investments.

“Inconsistent policies have created fear among automotive players on whether or not to invest in Malaysia,” she says.

Case for component makers

Another outstanding issue is the competitiveness of the local component makers.

Calls have been made to develop the Tier 1 vendors to have them innovate and plough in more resources into research and development to create a more vibrant supply chain.

Due to a lack of scale, a number of the component makers in Malaysia are basically still nut and bolt assembly companies, importing the components and assembling them for car companies in Malaysia.
“Presently, not many first-tier suppliers can compete on a global scale. Malaysia needs to do more to further develop the first-tier, second- and third-tier parts components suppliers,” says Kuah.

He says within the Asean region, Thailand has a larger automotive base for parts components manufacturing, and hence, enjoys greater economies of scale.
“The challenges facing the local automotive parts components manufacturers is cost competitiveness, apart from quality and access to latest technologies,” says Kuah.

One component maker claims that protectionist policies have resulted in components from Malaysia attracting higher import duties into countries in South-East Asia.

One way for components makers to up the ante is by forging Technical Assistance Agreements (TAA) with leading global OEM companies to enable them to access design capabilities, best practices in production and quality control.

“The government should consider providing incentives to Malaysian companies to enter into such agreements,” he says, adding that UMW Toyota Motor Sdn Bhd (UMWT) is aiming to export more than RM1bil worth of automotive parts components to Toyota affiliates worldwide. It is a 43% increase over the more than RM700mil the company earned in 2009.

Another perennial issue is the high cost of vehicle ownership in the country, no thanks to high taxes. Such taxes may be a significant source of Government revenue but they remain a sticky issue, one that has also made things difficult for policies such as the vehicle end of life due to the high cost to buy cars.

Fuelling the situation

The poor quality of fuel in Malaysia is another touchy subject.

Energy companies say offering higher quality fuel involves higher costs which ought to be recouped through a small increase in fuel cost to end users.  Opponents of the passing the buck argument say legislation should be sufficient to compel companies to provide better quality fuel without having to burden the consumer.

For one, Nasarudin hopes for higher grade fuels, especially diesel, in the near future: “Global carmakers have stepped up efforts to develop new highly fuel efficient models that run on EURO IV or V diesel and by 2014, EURO VI will be introduced.

“These cars will greatly reduce fuel consumption and CO2 emissions, which need to taken seriously.”
Briscoe laments that for far too long, Malaysian automotive users have been compelled to utilise substandard fuels, even compared to their neighbours in the Asean region.

“Lower grade fuels leads to higher emissions of harmful gasses, not to mention cause higher wear and tear on engine components. With the government committed to reducing carbon emission intensity per gross domestic product (GDP) by 40% to 2005 levels by the year 2020, the adoption of Euro IV standards is a vital step in ensuring effective widespread reductions from throughout the passenger and commercial vehicle segments,” he says.

“The quality of our fuel in our country, particularly diesel, also ought to keep up with the latest global trends,” says Aishah.
“Otherwise it will hamper the car companies from introducing the latest design and technologies into Malaysia.
In addition our country may end up a dumping ground for cars with obsolete technologies and old designs.”

The BIG merger

The merger between Proton and Perodua is no longer a matter of if, but simply when.

But not all are for the marriage. Its detractors say a merger could be a setback for the industry as it would only benefit Proton. One analyst is concerned that with the merger, Perodua’s historically high return to shareholders could suffer a beating.

Naturally, not all agree. “I don’t think consumers care. If Daihatsu remains in the picture, then there is no difference to them,” says an auto player. “This deal depends on what Daihatsu would do.”

Related Stories:

Proton MD’s vehicle end-of-life policy proposal received a lot of brickbats

Used car sellers hit by margin squeeze

2010 car sales performance in major Asean markets

Rebadging – a step forward or back?

Calls for faster liberalisation

END OF A WELL WRITTEN ARTICLE:

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The Star: Used car sellers hit by margin squeeze

The Star Business: Saturday November 6, 2010

Used car sellers hit by margin squeeze

THE local automotive industry may be on an up and up this year in terms of total industry volume, but many used car dealers feel that margins are being squeezed due to increasing competition.

“There are already too many cars and models in town. If you look at the average classified advertisement for used cars, there are more sellers than buyers,” says a Kuala Lumpur-based used car dealer.

Tan, a Kuala Lumpur-based used car dealer concurs, says that with new players coming into the market, there would be more vehicles in the market and competition among used car dealers or grey importers would be more intense.

Early last month, the Government said it was evaluating the possibility of granting manufacturing licences to five foreign automotive assemblers with the view of allowing them to operate locally, and would make a decision by year-end.

The Government already granted a manufacturing licence to Berjaya Corp Bhd, which is keen to assemble one-litre right-hand drive cars in Malaysia with China-based BYD Auto Co Ltd.
Grey importers bring in both new or used motor vehicles and motorcycles legally from another country through channels other than the maker’s official distribution system.

“Competition is already tough and will only get stiffer next year. With locally assembled cars, prices will be cheaper and a lot of customers, if given a choice, would prefer to buy a new vehicle than an old one.”
Chong, a Klang Valley-based used car dealer says sales this year had been relatively flat compared with 2009.

“Sales for the remaining months of the year are expected to be slow as customers prefer to wait for the new year so they can gain better resale value for their new cars.”

Separately, although he says the abolishment of the open approved permit (AP) system by 2015 is a good move, he feels that it still might not happen.

Under the reviewed National Automotive Policy (NAP) announced late October last year, the open AP policy to import used vehicles will be scrapped by Dec 31, 2015.

Franchise APs, meanwhile, will be terminated by Dec 31, 2020.
“I feel it’s still a question mark and will carry on,” says Chong.

During Budget 2010 last year, the Government also proposed that open APs no longer be sold for a measly few ringgit, instead slapping a RM10,000 fee for such a document. “The RM10,000-fee is a burden on used car dealers as it costs about RM50,000 for an AP. If it’s a high-end car, it could cost more,” he says.

Lam, a used-car dealer from Perak, is also looking forward to APs being abolished but is skeptical.
“Cars in Malaysia are ridiculously expensive and it’s time that APs be abolished. But will it happen? I’ll believe it when I see it.”

The Association of Malay Importers and Traders of Motor Vehicles Malaysia (Pekema) is, however, hopeful that APs are maintained.  Vice-president Sharifah Noor says auto players dependent on APs will be hurt as they had invested considerable sums in the business.

“Abolishing the APs will definitely have an impact on our members,” she says, adding that the AP system has helped create many bumiputra entrepreneurs in the automotive business.  “The automotive business is our members’ main income stream and a springboard for them to venture into other businesses.”

Earlier this year, it was reported that Pekema Sabah branch had asked for the review of the (RM10,000) levy charged on open APs to import used vehicles.  Pekema Sabah had also requested the Government review the policy to end the AP system.

Pekema Sabah chairman Rozman Isli was quoted as saying that the levy of RM10,000 for the issuance of each open AP is a burden to members, especially during the economic slowdown.  Sharifah says Pekema is currently in talks with the Government to split payment of the RM10,000 levy into two parts to make it easier for its members.

“It’s still being finalised,” she says.

END OF ARTICLE.

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SOURCE:
http://biz.thestar.com.my/news/story.asp?file=/2010/11/6/business/7341035&sec=business