Rich man EV "toys" paid in cash while 80% of Proton and Perodua owners stuck with 9-year loans

Malaysia’s two local automotive companies controlled nearly 67% market share in car sales last year as 2023 capped off another record-breaking year. While Proton and Perodua remain favourites for buyers, around 80% of its owners are on a 9-year loan according to a research note by AmInvestment Bank.

Both P1 and P2 are the top choice for demographics with moderate to lower incomes and some even chose to extend the loan period beyond 9 years if permitted to do so. Due to poor public transport infrastructure, especially outside of the Klang Valley, cars are considered a necessity rather than a luxury for most consumers.

"Their priority is the monthly instalment payments. Their financial balance is influenced by the prevailing interest rates,” the investment report stated. "The everyday people closely monitor the Overnight Policy Rate (OPR) as their financial situation aligns with it. This is a factor that the government cannot overlook.”

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Bank Negara Malaysia (BNM) has maintained a 3.0% OPR since May 2023. AmInvestment Bank stated that applications and approvals for car loans especially for the Perodua Myvi are maintaining a strong rate.

The research firm stated that demand for the Myvi is very high, with delayed deliveries extending into the previous year. This was driven by buyers rushing to purchase due to ongoing needs and concerns about potential future OPR increases that would raise car ownership costs.

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Purchases for used cars are also still high according to the report with most going for affordable car segments from Japanese makes. The report stated that excess demand for used cars was due to supply chain issues from manufacturers in mid-2023.

"Moreover, the current trend also shows buyers avoiding purchases of cars with large engine capacities. This may be due to concerns about fuel subsidy rationalisation," according to AmInvestment Bank.

The research group also observed high interest towards battery electric vehicles (BEVs) though these are mostly among the higher income T10 group who treat them as weekend “toys”.

"Of all the EVs (electric vehicles) purchased, customers opt for loan periods of five years, and some even pay cash, which is a common practice among the elite T1 group,” the report stated.

"Furthermore, various tax exemptions such as excise duties, sales tax, and road tax make BEVs a worthwhile investment for the elite.”

Also read: MAA: 38,214 xEVs sold in 2023, highest yet for Malaysia; 10,159 BEVs, 28,055 hybrids