Auto industry in Malaysia to feel the pinch?
Interest rates for car loans has been raised recently. The news came as a big surprise for me, considering the fact that our government is (or was) trying to improve the situation with the auto industry in the country. Having said that, the new change is pretty one-sided in my opinion.
Why?
Because the interest rates for foreign cars has been increased while the interest rates for local cars has been lowered, albeit just a little. To me, this move is pretty obvious that the government is trying to “encourage” people to get local cars Proton or Perodua.
For stock investors like myself, what does this change mean to me? I guess it’s quite obvious that there WILL be impact on the companies involved in auto industry namely Tan Chong, UMW, Proton, etc. Do bear in mind that these companies’ sales rates were not very good towards the end of 2008 and early 2009, and having this increase in car loan interest will further deter people from buying cars…at least foreign cars.
Check out this article from The Star – Interest rates for car loans raised.
p/s….. the effect might not be that obvious just yet. I guess we’ll see it in the next quarter or the one after that.
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I’m not sure about the local effects of such a move but isn’t there a danger that it could spark some retaliatory tariff increases in export destinations? And wouldn’t that spell trouble for local automakers that depend on exports to stay viable?
But then again, the Toyotas and Hondas probably wouldn’t care if their marketshare here is a tiny % of wordwide sales. Personally I think the Koreans got it right. Their entire machinery seems geared for export in spite of inconsistent product quality.