August 2015 car sales dips 8.9%, falling ringgit might be the cause

Kuala Lumpur: Sales is something that consistently experience fluctuations in its graph. The cause can either be the implementation of GST or the rise in fuel prices. But recently, The Malaysian Automotive Association (MAA) has released a figure of overall vehicle production and sales in the month of August 2015.

Read Also: MAA - Sales figure rises in July 2015, still lower than 2014

The latest figures report that the auto industry saw sales of 53,452 units last month. That total is 2,326 units or 4.5% higher than the same month in 2014, but still its 5,194 units lower than the preceding month, July 2015. Well, this is a disturbing result for the enthusiastic automakers.

The 8.9% drop reported in August 2015 shows a continuation of a weak trend, which may be because of the combination of factors mentioned in preceded text.

Read Also: Malaysia Automarket Drops in the First Half of 2015

According to MAA, the uncertainties among businesses can be mainly because of the weaker ringgit, the RM is currently trading at 4.3 to the US dollar and is Asia’s worst performing currency this year. That is a surprisingly difficult to digest fact for the Malaysian auto market, where the majority of the automakers are based out of the country. This also portrays a gloomy overall global economic outlook and consumers who remain cautious in spending on big-ticket items as a result.

The report suggests the statistics as the sales from the start of this year till end-August is 434,282 units, which is still mounted as 10,269 lower than the same period last year. MAA has revised downwards its TIV forecast for 2015, from the original 680,000 to 670,000 units, of which 591,800 are expected to be contributed by passenger vehicles, down from the original 600,700 units. Here is some relief as 670k is still 0.5% higher than the 2014 TIV of 666,465, but we are not sure if hits the target.

Another concerning issue for the upcoming market is, if the ringgit will continue to slide against major currencies such as the USD and euro, then it will adversely affect the car prices, which could be heading north in the near future.

Read Also: BMW Malaysia pondering price hike, weaker ringgit might be the cause!

“If the situation continues, I do not rule out the possibility of price increases by early next year. Last year, when ringgit was at RM3.80 to RM3.90 to the euro, we did not discuss about currency, but now we talk about RM4.90 per euro and this is a significant devaluation and creates pressure,” BMW Group Malaysia CEO Alan Harris said last week.