The Malaysian Automotive Association (MAA) has announced its tally for total new car sales, better known within the industry as Total Industry Volume (TIV), for year 2020. A total of 529,514 new motor vehicles were sold in 2020, down 12.4 percent from 2019.
The cause of the downturn is of course due to the Covid-19 pandemic and the associated MCO restricting normal economic activities.
For two and a half months between March and May 2020, no cars were sold as showrooms were not allowed to operate during the first phase of MCO.
The Penjana stimulus package announced in June, which offered sales tax (SST) exemption to locally-assembled (CKD) cars while imported (CBU) cars were charged at only half the normal rate (5% instead of 10%), boosted sales in the second half of 2020.
However, the full effect of Penjana could not be felt because supply remained tight as car companies were facing supply chain disruption due to Covid-19, and many had already scaled down their production plans months earlier.
As manufacturers need at least 3 months to 6 months lead time to plan their production, organize labour and purchase the necessary raw materials and parts from other countries, few could ramp up fast enough to meet the unexpected increase in demand when Penjana was announced.
The local car industry ended 2020 with 480,965 passenger cars sold (down 12.6 percent) and 48,469 commercial vehicles sold (down 10.4 percent), totaling 529,424 units, down 12.4 percent from 2019’s 604,281 units.
The last time Malaysia’s TIV reached this low was 13 years ago, when TIV was at 487,176 units in year 2007 and 548,115 units in year 2008.
Forecast for 2021
For 2021, the MAA is forecasting an 8 percent growth, with TIV reaching 570,000 units on the back of low interest rates for car loans, many key new model launches, as well as major construction projects announced that will boost demand for commercial vehicles.
For context, the last pre-pandemic level TIV was 604,287 units, in year 2019. The forecast for 2021 means that TIV will return to 2017’s level of 576,635 units