The promise (just mere promise so far that is) of reducing car price 20% to 30% is not going to help the industry at all. It is akin to your boss telling you, maybe I will give you a pay rise if you help to improve the sales of the company say by end of the year. It definitely is not going to help. The statement is rather open ended and we do not know what to expect, as a car buyer, investor and business owner.
What happens when we do not know what to expect...potential car buyers may delay their purchases - me included. Second hand car dealers will be more careful when building to their inventories. Investors will be careful as I do not see anything concrete that is to happen to the automotive industry. The car parts manufacturer will be very afraid. If this statement is not backed up, probably car sales will suffer the next few years.
Already, we are suffering due to this feet dragging on the automotive policies. I am yet to see Volkswagen being committed to the Malaysia market when comes to CKD (Completely Knock Down).
Investors are not giving a good valuation on car parts manufacturers. I was doing some numbers and the average PEs for the automotive parts manufacturers / suppliers are somewhere around 7x - 8x. Against Thailand, where it is around 15x, we know where we are. This is why, partly the reason APM (owned by Tan Chong), although doing pretty well, with good growth is not being valued highly - below 10x PE. I just am not able to know the strength of APM. If opened up to compete, I am not able to know where is will be able to stand. Let's not talk about Proton and Perodua as we probably would know what will happen.
Investors in the parts sector are not interested in the Malaysian market. This is because we are already lagging behind both in terms of know-how as well as competitiveness. We do not have the scale, that's what I know.
There are no interests in automotive companies except for one or two like UMW and Tan Chong.
This mere statement of, will reduce car prices but without concrete follow up plans is just to make matters worse.
Anyway, I am still hoping for the car prices to reduce as I see this is the highest ticket item I may spend for the rest of my life and it is already and going to be a huge impact to my expenditure.
