CAR SALES GROW

PETALING JAYA: The recent hike in hire-purchase interest rates has not deterred vehicle sales, analysts said.

MIMB Investment Bank Bhd head of research Chan Ken Yew observed that auto loans and car sales continued to grow despite the hike.

“To be frank, this was not my initial thought. The more resilient auto loans and sales could be due to two reasons. Firstly the car replacement cycle and secondly, a growing affluent market,” he told Mail Money, adding that the buying power of the 40s age group will be strong for the next two years.

Prime consumption comes from those aged 45-48. MIDF Research reports that the car market is expected to remain buoyant, backed by interest on new vehicle models, attractive pricing and aggressive promotions.The second quarter is usually a slower sales period for all marques of cars.

“Any hike in hire purchase could affect sales of motor vehicles in the immediate term but sales are expected to pick up over the medium to long term. So far, sales have been quite resilient,” it said.

UOB Kay Hian Research expects car interest rates to remain moderate, and observed that car buyers had been rushing earlier to lock into lower hire purchase rates.

The research house said the automobile market can still expect a 10% year-on-year growth, but overriding the growth are economic growth expectations which could be tempered by economic developments in Europe and the US.

Chan said MIMB Investment Bank has not ruled out the possibility of a further increase in car loan interest rates should there be another hike in the overnight policy rate (OPR). “Initially, we expected another 25-50bps hike in OPR to 2.75% to 3%. Thus far, the External Trade statistics and industrial production index have started to show declining month-on-month growth. Should this continue in the coming months, we reckon that the room for the OPR hike will be limited to 25bps. That indicates the OPR could stay at 2.75% until year end.”

MIDF Research, meanwhile, said: “With the economy gaining traction and indications the central bank will bring the OPR back to what it deems a ‘normal rate’, we will not be surprised if the OPR rises by another 25 to 50 basis points at the subsequent Monetary Policy Committee (MPC) meetings. Our house view is that OPR will rise from the present 2.5% to 2.75% or 3% by year end.”