Top 5 Best-Selling Cars in 2017

All four Perodua models were in the top 5 best-selling cars in 2017. The other model was Proton Saga. The listing was based on the registration figures from January to December 2017 for the respective model.

Top on the list was Perodua Axia with 67,464 units registered in 2017. Axia represents 11.7 percent of the total market and 13.1 percent of Passenger Vehicle segment in 2017. The model was launched by Perodua in 2014 and has since overtook Perodua Myvi as the most registered car in Malaysian market.

Second in place for 2017 was the Perodua Myvi with 55,847 units registered. Myvi led the Malaysian market for 11 years in a row, until 2015. This figure includes the 3rd Generation Myvi that was launched in November 2017. Last year, Myvi hold 9.7 percent share in the total market and 10.9 percent in the PV segment.

Number three most registered car in 2017 was also a Perodua model, namely the Bezza, which was launched just a year before. Bezza is an A Segment Sedan, engineered and designed by Malaysian for Malaysia and the first sedan car for Perodua. In 2017, 53,541 units Bezza was registered reflecting 9.3 percent market share in the total market, automatically making it as the best-selling sedan in the market.

At number four was another small sedan, the Proton Saga with 30,488 units registered in 2017. Saga holds 5.3 percent share in the total market or 23,053 units behind Bezza. Perodua Alza was at with placing with 28,035 units registered in 2017. Despite an old model in the market, Alza continued to hold the best-selling MPV in 2017.

In summary, the top three models in the country in 2017 were all Perodua models.

For me, I am blessed with the strong supports and trust given by Malaysian to Perodua. To us, YOU MATTER MOST. Always.

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Lending Guidelines and OPR Impacts

Interestingly, within two days, there were two "unfavourable" news impacting the automotive industry, particularly the national brands. One was on the stringent lending guidelines, which according to Datuk Aishah, MAA's President "Perodua and Proton to be hit the most by lending guidelines". The statement was made during the  announcement of 2017 Result on 23rd January 2017.

Lots has been mentioned by many about this issue (including in this blog) as the matter has been haunting the industry over the last four years. It got worse over the last two years. It is understandable when MAA said that the two national brands, namely Proton and Perodua will be hit the most as the price segment of these two brands are positioned to cater mainly for low and medium income group with their affordable products. And these are the people that normally have difficulties in getting through the stringent lending guidelines.

The statement was however rebutted by the Association of Banks in Malaysia (ABM) by citing that "the commercial banks in Malaysia remain supportive of the automotive sector as evidenced by healthy overall approval rates of 70 percent for the purchase of cars from January 2017 up until November 2017."

ABM added that "the car loan applications received by member banks are assessed in accordance with existing guidelines and the respective bank's internal procedures, including credit evaluation, taking into consideration the applicant's income as well as existing borrowings, to determine his/her capabilities to service the loan." 

Ironically, that is exactly the cry of the automotive industry over the last few years, that the guidelines are becoming too stringent. Jointly, Proton and Perodua, via the Malaysian Automotive Institute (MAI) have met and appealed to BNM on the same issue. The guidelines.

As a matter of fact, Perodua has not been achieving 70 percent approval ever since the Prudent Lending Guidelines enforced by BNM. The current rating is much lower than that.

Second news was on the recent announcement on the increase of the Overnight Policy Rate (OPR) by 25 points to 3.25 percent. The last hike of OPR was made in July 2016 to 3.0 percent. The OPR will determine the interest rate of the saving as well as the loan made through the commercial banks. 

Very likely, the interest rate for the car financing or Hire Purchase loan will increase accordingly. Till date, banks have not issue any new rate but this will not last long presumably.

Perodua is in constant communication with the banks to understand the future direction relating to interest rate involving its customers. Current estimation, if implemented, Perodua customers will be slapped with additional RM11 (maximum) on their loan to buy Perodua car, assuming the loan value at RM50,000 for 9 years.

This is rather tough for Perodua customers though the impact is not as huge for the other premium brands. Since Perodua is selling affordable product, and catering to low end segment, RM11 a month is still a big amount to many. And not to mention that this will further add to current suffering from the stringent loan approval as monthly repayment will be much higher than before. On the other hand, we will probably see more "downsizing" and  customers will shift to smaller and affordable cars amid higher purchase costs of bigger cars.

For me, trying to take this positively. As mentioned by YAB Prime Minister, the hike in OPR will not burdening to people as it also will lead to better interest in saving, but many of the people have more loans than saving. How?

MAA: Flattened Passenger Vehicle Sales

"The local automotive market had remained subdued much of last year. For the second consecutive year, the TIV had contracted, reflecting perhaps a down-cycle of the market, which started in 2016", stated MAA in their official announcement yesterday.

The Passenger Vehicle (PV) segment increased by a mere 85 units or 0.02 percent at 514,679 units in 2017 against 2016. The Commercial Vehicle (CV) contracted by 3,536 units from 2016, resulting a lower TIV by 3,450 units or 0.6 percent in 2017 at 576,635 units compared to 580,085 recorded in 2016.

The official figures announced by MAA were not much different from what being mentioned by many OEMs during their recent announcements (and as projected in earlier posting). By brand, Perodua continued to be in number one position with 35.5 percent market share in the total market. Honda was at second position with 109,511 units and a market share of 19.0 percent, followed by Proton and Toyota with volume of 70,991 and 69,492 units respectively.  Proton's market share was at 12.3 percent, just 0.02 percent higher than Toyota.

By segment, Perodua hold 39.8 percent share in PV segment, followed by Honda at 21.3 percent, Proton at 13.8 percent and Toyota at 9.3 percent respectively.

MAA is projecting a growth of 2.3 percent in 2018, with TIV is expected to be around 590,000 units. This is about 15,000 units lower from the earlier projection. The expected growth is attributed to the nation's higher projected economic growth of 5.0 to 5.5 percent.

The 13,365 units growth from 2017 is expected to be contributed equally by higher PV and CV sales at 2.3 and 2.5 percent respectively. PV market is expected to expand by 11,821 units and the CV segment is to increase by 1,544 units in 2018.

MAA also cited that the strict lending guidelines, the implementation of MFRS 9 and the prevailing high household debt ratio will remain as the biggest challenge that need to be faced by most of the players in the market.

There is also a potential hikes in the Overnight Policy Rate (OPR) by Bank Negara. The last review on OPR was about one and the half years ago. 

Honda, in a separate announcement recently stated that their sales in 2017 records an all-time high. Honda Malaysia has been in the pole position among the non-national brands for 3 years in a row. Since its inception in 2003, Honda has sold 730,000 units in Malaysia.

For me, MAA's latest projection on 2018's TIV is much more realistic than the earlier 605,000 units. I believed market will not change much as long as there is no major shift in the loan policy imposed by the banks as more than 95 percent of Malaysian will continue to buy cars via Hire Purchase (HP) arrangement. If the loan continue to be difficult, than the growth of the TIV will be very much restricted.

"Together, We Are One"

Last Friday (19^th January 2018), Perodua, during its 2017 Performance Review with Media, has officially announced its 2017’s result and the projection for 2018. 

In summary, the scorecard for 2017 were: 

• Registration was 1 percent lower than 2016 at 205,000 units and 1.5 percent better than target of 202,000 units.
• Market share was 0.1 percent lower than 2016 at 35.6 percent.
• Service Intake was 3 percent better than 2016 at 2,100,000 units.
• Service Revenue went up by 12 percent against 2016.
• Parts and Accessories sales were 7 percent higher than 2016.
• Production was down by 6 percent against 213,000 units produced in 2016.

*TIV was calculated at 576,000 units, 0.7 percent lower than 2016 (pending official announcement by MAA).

After Sales Service has shown positive improvement in all areas, including Intake, Revenue, Parts and Accessories, as well as Body and Paint business. Through strategic efforts and initiatives, the After-Warranty ratio increased to 26 percent compared to 23 percent in 2016. Body and Paint business continue to grow by 10 percent, year on year.

Perodua’s Pre Owned Business (POV) has also shown an improvement with trade in volume increased by 15 percent as compared to 12 percent in the year before. Wholesale volume expanded by 10 percent from 4,890 units recorded in 2016.

Moving forward, Perodua is positive with the outlook of 2018, aiming to keep its market share at least at 35 percent with additional 4,000 units or 2 percent growth in registration over 2017. Similarly, Perodua is targeting a 3 percent growth in Service Revenue, 2 percent growth or 2,140,000 units Intake and an increase of 8 percent in production to 215,000 units.

Perodua will continue to expedite the delivery of the 36,000 bookings collected for its new Myvi. This, together with growing popularity of its compact sedan, Bezza and ever strong Axia will drive the expected growth. Perodua is also being cautious of growing competition especially in A and B segments as well as on the more stringent Hire Purchase approval to be imposed by all banks as a result of persisting higher household debt ratio.

For me, as in Delta Goodrem’s song, “.. see what we have become, Together We Are One ….”, and again this year, we will “go higher”, InsyaAllah.

"Cuti Peristiwa" and TIV

Holiday is something almost everybody will look forward. Ad hoc or additional holiday, or “Cuti Peristiwa” as we now getting used to, is even more interesting. Previously, I wrote about how December 2017 were shorter by 2 working days compared to December of any other year before. Some might ask, so what? It is just one or two days lesser.

To public at large, it was nothing. To the automotive industry, especially on market side, it makes lots of different, especially from the perspective of the TIV. Scheduled public holidays are not too bad, but the unplanned holiday could be quite damaging to Sales, especially if it is too often and if declared just before or after the weekend.

In 2017, there were two months that went with these Cuti Peristiwa. First was in April and  second was in September. Trend-wise, the first three months of 2017 was far better, with TIV of almost 141,000 units compared to 131,500 units during the same period in 2016. However, the following three months of 2017 shows a very weak momentum compared to the same period in 2016 with TIV subtracted by 700 units. Despite lower sales in January to March in 2016, the market picked up steadily in April, May and June. In 2017, the trend was totally opposite with sales started to slow down after April.

There was an unplanned holiday declared in April 2017, resulting in working days for the month reduced to 18 days, 3 days shorter than the same period in 2016. The “dominos” of the one day “Cuti Peristiwa” to the market normally lasted for at least two or three months after.

In September 2017, another unplanned holiday was announced to celebrate our winning in the Sea Games that Malaysia hosted. The TIV dropped from 51,700 in August to 41,000 units in September. In 2016, the TIV for September was at 48,100 units. Similarly, although there was growth in October up to December 2017, but the momentum was very weak to match the growth and TIV recorded during the same period in 2016.

It is difficult to explain the exact relationship of the 1 day “Cuti Peristiwa” to the market, other than "it is a holiday". But, trend-wise, that 1 day added to  already a bit too many scheduled holiday did affects the overall performance of the market, unfavourably.

Perodua also suffered the same fate as a result of the unplanned holidays. Since Perodua is a volume player, the impact was even more severe compared to other OEMs. In April 2017, Perodua recorded a subtraction of 5,100 units at 14,400 units from 19,500 units recorded in March. In 2016, 14,900 units were registered in April, lower by just 2,700 from the month before. 


Similarly, though there was a growth post April but the momentum was weaker compared to the same period in 2016. Similar pattern also observed in September 2017 when Perodua only managed to register 14,400 units, a drop of 4,200 units compared to the previous month and 2,700 units lower than the same period in 2016. Worst, the recovery in the following months until year end was somewhat distorted. Typically, 4th quarter result contributes the highest percentage to Perodua annual performance at over 27 percent. In 2017, it only contributes around 26 percent.

For me, apolitical as I wish to be, I have to agree to YAB Tun Dr Mahathir’s recent critic on too many holidays declared "is not good". Or perhaps, in the future, the “cuti peristiwa” should be differed and implemented with sufficient notice and not as ad hoc as it was in the past.