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?
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?
