‘Rate hike will affect car sales’

RAWANG: An interest rate hike would have a significant impact on car sales in Malaysia.

“Customers are concerned over speculation that interest rates would be increased,” said Edaran Tan Chong Sdn Bhd executive director, Datuk Dr Ang Bon Beng.

“In fact, the new fuel structure has not affected sales as much, as customers can switch to smaller cars. But higher interest rates will have a negative impact,” he told reporters during a media tour of Tan Chong Motor Assemblies Sdn Bhd’s plant in Serendah near yesterday.

According to Ang, customers were also concerned over drastic changes to their car loan repayment amid the slowdown in the economy.

During the January to May period this year, total industry volume (TIV) rose by 29 percent to 228,984 units from 176,959 units in the same period last year, he said.

During the period, Edaran Tan Chong had a five percent market share or 11,131 units compared to 6,015 units previously boosted by the sale of its Grand Livina, Latio and Sylphy models.

Ang expects both TIV and Edaran Tan Chong’s sale to increase to 48,000 units and 2,697 units respectively in June.

The bookings for Grand Livina has reached 16,500 units todate while for Sylphy, the bookings stand at 1,500 units, he said.

To boost sales, the company plans to launch a completely built-up new model, Navara, by the second half of the year, he said.

“We are in discussion with Nissan to bring in compact vehicle in the next two to three years as people are now switching to fuel-economy vehicle,” he said.

On the expansion of its 19-hectare plant in Serendah, Tan Chong Motor Assemblies Sdn Bhd’s executive director, Low Seng Chee, said the project was expected to begin in 2010 in order to increase capacity from 28,800 units to 63,360 units annually.

Low said the expansion cost has escalated to RM100 million from RM60-RM70 million due to the rise in fuel price and building materials.

“However, we have to look at current economic situation before we pursue it,” he said, adding that the expansion must also match very closely Edaran Tan Chong’s market requirement.