Lockdown may spell end for many car dealerships

By CARSIFU | 26 July 2021


PETALING JAYA: Vehicle dealerships, big and small, are feeling more than a pinch from the current lockdown.

Many car and motorcycle dealers are fighting for their survival and may be forced to shut down soon if they are not allowed to reopen for business.

Under the Government's four-phase National Recovery Plan dealerships are not deemed as essential and have to remain close. The country is still in Phase 1 and dealerships are only allowed to open in Phase 3.

With Covid-19 infection rates rising to a worryingly level with a record 17,000-plus registered on Sunday (July 25), it looks like any hope of resuming the vehicle business will be months away even as vaccinations ramped up across the country.

By then, it will be all over for the many distressed dealerships, most of which are run as standalone entities and are not owned by the car companies.

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According to Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad, many small- and medium-sized dealerships were able to manage during the initial Movement Control Order (now rebranded as National Recovery Plan) in 2020, as they had cash reserves to cover running costs such as rental, salaries and other expenses.

But they never expected the pandemic and the ensuing series of restrictions to drag on into 2021. Now with reserves running low, they are looking at the grim possibility of shutting down, said Aishah recently.

Better-funded dealerships with workshops are allowed to have them opened but with reduced staffing. However, that is not enough to sustain the overall business.

Berita Harian cited Aishah as saying that bigger dealerships may shutter by October if they can't resume business.

The MAA president said she has raised the plight of dealerships to the Government, and is hopeful for a positive outcome.

With many vehicle companies registering zero sales for June and July, there's pent-up demand, buoyed by the ongoing sales tax holiday.

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“With showrooms not being allowed to open and most government agencies either closed or working with minimal staff, sales will be drastically affected,” said an analyst with a local bank-backed brokerage.

This comes as MAA projected a dismal picture of car sales in Malaysia for 2021. Last week, it had revised downwards its vehicle sales forecast by 5.6% to 500,000 units this year, and is bracing for a tough second half for the industry as businesses continue to be buffeted by the ongoing nationwide movement restrictions.

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