Interest rate cut unlikely to boost car sales

By CARSIFU | 12 March 2020

PETALING JAYA: The recent interest rate cuts by banks in the country are unlikely to have a significant impact on car sales this year, say automotive industry players.

However, Honda Malaysia remains positive on achieving decent sales this year, especially after launching the facelifted Civic and new Accord sedans in February.

"Besides the reduced interest rates, we hope that consumers will gain more buying power which will increase car sales. Also, the sales of Jazz and City has been encouraging. Now, with lower interest rates, we believe this will benefit more car buyers," said the Honda Malaysia spokesperson.

Meanwhile, a spokesperson from Mazda car distributor Bermaz Auto Bhd says the recent interest rate cut by banks is not expected to significantly improve sales.

"We have not seen any impact so far. No change to our sales target this year of 14,000 units," said the Bermaz Auto spokesperson.

Proton CEO Dr Li Chunrong says it is too early to tell whether the recent interest rate cut by banks will translate into high car sales.

"At this point in time, it would be far too soon to speculate on the impact. We must also consider that the OPR (Overnight Policy Rate) cut is a reflection of the current economic environment, which is less than optimal. We will have to closely monitor buying behavior and general consumer sentiment over the coming months before we can fully understand how the market will move."

Dr Li reiterated that in theory, a lower interest rate environment should translate to more hire-purchase loan approvals "but this remains to be seen as the overall sentiment is clearly one of caution."

"While there may be easier access to credit, the question is whether consumers will want to spend. Our advantage is that a car is still very much a necessity and the Proton Saga, Iriz and Persona offer a very significant value proposition.

"In fact, it is in prudent times like this when our model range tends to shine because consumers realize that they get a lot of car for their money. This is especially so when you consider the level of technology, safety and quality that go into these three cars," he said.

Meanwhile, Malaysian Automotive Association president Datuk Aishah Ahmad says the recent Overnight Policy Rate cut by Bank Negara is not likely to impact car sales.

She says, "Hire interest rates are flat for the duration of the hire purchase tenure. Still, hire purchase interest rates may drop slightly due to competition, and it also depends on the customer’s credit worthiness."