Automotive

Published on August 16th, 2021 | by Joshua Chin

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Local Auto Sector Suffers RM 14 Billion Loss During MCO 3.0

This huge loss is actually worse than it is, as it only takes into account local vehicle sales. 

It should come as no surprise that with the showrooms and factories having been forced to close (yet again) beginning from June 1st due to the nationwide lockdown imposed, the local auto industry will be posting some huge losses over this period. 

The scale of it however will perhaps still be shocking to many even when given the proper context, as the Malaysian Automotive Association (MAA) recently revealed that the financial damage dealt to this sector throughout the two and a half months of MCO 3.0 totals to over RM 14 billion. Making things worse too is that this already staggering figure only accounts for the losses from sales of vehicles in the domestic market, and had not included the lost revenue from the exports of vehicles components, not to mention also the local sales of spare parts. 

Now delving a deeper into the details meanwhile as to how much the local auto industry has suffered during this time, MAA’s latest statistics put domestic sales of vehicles at 1,921 units in June and 7,086 units in July of this year. Hence representing a drop of about 95% and 85% respectively, when taking into account that the average sales (aka Total Industry Volume or TIV) on a normal month ranges from between 45,000 and 50,000 units. 

Car sales of course aren’t the only sector within the local auto industry that was battered by the still ongoing nationwide lockdown, with the auto production taking a pretty big hit during this time too. Such is evidenced by the fact that Total Industry Production (TIP) for June and July 2021 were only at a paltry 276 units and 2,775 units respectively, in comparison to the average monthly total production of around 40,000 and 50,000 units. 

Then again though, the MAA has come out to state that the hardest hit during these tough times are to be the small car dealers. Many of whom rely solely on incomes generated from the sales of new vehicles, and many of whom are currently facing severe cashflow problems and are also having difficulties in retaining their employees throughout this pandemic. 

Fortunately however for the local auto industry, there could now finally be some light at the end of what was a very dark tunnel. That is because the government has recently announced that the sales and production of motor vehicles in states currently under Phase One of the National Recovery Plan can finally be resumed effective today. 

A move that has been welcomed enthusiastically by the MAA, this essentially marks the point of revival for the local auto industry after its 2.5 month slumber. With many of its member’s vaccinating their employees in earnest too, it could perhaps be safe to say (at this point at least) that there will unlikely be another point in the near future where the industry needs to be put to sleep again. 

car factory

And in continuing on the topic of reasonably safe predictions, the MAA also projects that August 2021 sales will be significantly higher than the month prior, as showrooms in key states like Selangor and Kuala Lumpur are allowed to operate again. The association nevertheless pledges to give their fullest support moving forward in the continued fight against Covid-19, and will adhere to all the current SOPs set by the authorities. 

Volkswagen Malaysia

PRESS RELEASE: The Malaysian Automotive Association (MAA) welcomes and thanks the government especially the Ministry of International Trade and Industry (MITI) for the re-opening of a number of economic activities including sales and production of motor vehicles in states currently under Phase One of the National Recovery Plan effective today. 

The local automotive industry had suffered huge losses since motor vehicles production plants, distributions centres and sales centres especially in Klang Valley were halted since 1 June 2021. That shutdown affected not only the automotive companies but went on to having wider repercussions on the entire automotive eco-system nationwide. 

Sales and production of motor vehicles for the past 2.5 months had been greatly hampered. Based on MAA’s latest statistics, sales amounted to only 1,921 units and 7,086 units for June and July 2021 respectively. (To give an overall perspective, average sales or better known as Total Industry Volume or TIV is between 45,000 to 50,000 units per month). Likewise, the Total Industry Production achieved for June and July 2021 were only 276 units and 2,775 units respectively (the average total production is between 40,000 units to 50,000 units per month). 

The most hard hit are the car dealers of MAA members particularly the smaller ones, which rely solely on incomes generated from the sales of new vehicles. Many of them are facing severe cashflows problems and have difficulties to retain their employees especially those sales advisors. At present, MAA members have around 1300 dealers located throughout the country. 

“Total losses for the past two months (i.e., June and July 2021) was more than RM14 billion. This is just only from sales of vehicles in the domestic market. Our members had also lost much in terms of revenue from exports of vehicles and components, and sales of spare parts locally. All in all, these losses had been very substantial and unprecedented”, said Datuk Aishah Ahmad, President of MAA. 

Datuk Aishah Ahmad said further, “The industry cannot sustain itself if the shutdown is prolonged. Many of us are bleeding. We have used up much of our savings over the past one year. So, it is a huge relief that finally we are allowed to resume our businesses and to revive our industry. On behalf of all MAA members, we thank the government especially the Ministry of International Trade and Industry (MITI) for allowing the automotive sector to operate”. 

MAA members had responded to the call by the government to register for Covid-19 immunisation programmes for their employees. Many companies had already started their vaccination programmes to complement the government’s efforts to get as many people as possible to be vaccinated by October 2021. 

Many MAA member companies’ employees have already received at least one dose of the COVID-19 vaccine while a few companies had almost all their employees been fully vaccinated by now. 

MAA members pledge to give their fullest support and will adhere to all the SOPs set by the authorities. 

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About the Author

Automotive journalist. Professional work on dsf.my and automacha.com. Personal writing found at driveeveryday.me. Instagram: @driveeveryday



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