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It’s a buyers’ market: Back to the drawing board for industry captains to face challenges ahead

POSTED BY admin ON 11 September 2015

The Malaysian automotive industry is already responding to the economic crisis as we discovered this past week.

For some, the imposition of GST on April 1 had been a dampener on sales that they had anticipated. The past few months tumble in the global scenario, including the ringgit’s falling value, heightened the urgency to launch their post GST plans. Keichi Suzuki, MD of Suzuki Malaysia said that they had re-launched their Swift as a stripped-down model GA at a stunning entry level price of RM59,888.

“We saw that the Malaysian habit is to change the in-car audio and the rims. So we decided to position the car as an entry level model with basic kit of steel rims, tyre inflator instead of spare tyre, and without the in-car entertainment,” he said.

At this price, the Suzuki Swift GA is within striking distance of the Perodua Myvi’s top-spec model, the Myvi Advance. Both are 1.5 litre cars, four-door hatchbacks with automatic transmission. Both are undeniably good, world-quality, entry level cars. But the news is that one of the national car makers is already feeling the pressure of the bad forex and will pass the increase in costs by raising prices soon.

Even though Perodua’s CEO, Aminar Rashid, has raised the possibility about a price increase, the bets are that Proton will be the first to pass on the increased cost of the USD versus the ringgit. On the premium end of the market, a Mercedes-Benz Malaysia manager, is unperturbed by the ringgit’s drop. Speaking on the sidelines of a farewell lunch for his boss, Roland Folger, MBM passenger Marketing manager Mark Raine said that companies like his would have hedged the USD and Euro, perhaps for up to three years.

Possibly, some of the best deals would be premium used cars. The big action is at Auto Bavaria which has created a carnival atmosphere at its Used Cars section in Glenmarie. You can test a good range of used premium executive sedans there. Some of the models include Audi A6 hybrid, registered 2013 and going for RM228,000), a BMW 528 (RM278,000), Jaguar XF (RM350,000).

If you don’t like the buzz, then go to the AP car showroom. Here, you will be treated like God, said Desmond Chong, a BMW enthusiast, and owner of KL Auto, an accessory shop specialising in high-end in-car-entertainment.

“Now is a buyers’ market and the salesman at the re-cond car showroom will be so pleased to serve. You can get a fully-loaded BMW535i, 2010 model for RM218,000. The mileage is low and this is a genuine mileage because the European cars are so advanced that when you do an oil change, or replace the brake pads, it’s logged into the car’s on-board computer.
“It’s not the same with the Japanese models, the Alphards and Vellfires, where the mileages are wound back to 10,000 km or 30,000 km,” he said.

The Green Economy.

IGEMS is the annual exhibition and conference on sustainability presented by the Ministry of energy, Green Technology, and Water (KeTTHA) and co-organised by the Malaysian Green Technology Corporation (GreenTech Malaysia). This is the sixth anniversary of the IGEMS and we had an interesting contrast in philosophies of the two CEO/enthusiasts in automotive sustainability: Ir Hadri Harris the CEO of GreenTech and Madani Sahari, the CEO of the Malaysia Automotive Institute (MAI).

IGEMS had lined up a list of presenters with solid credentials and the gist of the arguments presented was that the electric vehicle were inevitable, that the target of one million electric vehicles worldwide by 2020 would be achieved. BMW corporate and government affairs, head of steering governmental and external affairs, Andreas Kluggescheid, said that as at December 2015, the cumulative EV sales worldwide would reach 400,000 unit.

“Once the 400,000 unit level is reached, this will mark the beginning of the technological change era,” he said. Quoting the example of Norway and the Netherlands, others believed that the adoption of EV’s would be faster if governments were more encouraging by means of taxes on carbon emissions.
 
Madani however argued that EV readiness was not there yet:
(1) Electricity grid readiness – not enough capacity when there’s high number of EV charging?
(2) EVs are rich man’s toy?
(3) High price of EV, not affordable.

Madani proposed a strategy to reduce price through local battery manufacturing.??A panelist from Norway remarked that based on their studies, electricity demand only grows by 7% if everyone in Norway moves to EV.

“In Norway, the Tesla Model S is not priced as a luxury car, so it’s not rich man’s toy. And also the cheapest Volkswagen Golf you can buy in Norway is the e-Golf (compared to the diesel, petrol, hybrid versions),” added a conference participant.