Wednesday, June 2, 2010
Date : 02-06-2010
But car companies say rate hikes will have small impact on sales
PETALING JAYA: Interest rates on new non-national car loans has increased by an average of 0.25 percentage point effective yesterday while rates for new national car loans saw a hike of about 0.10 percentage point, a check with several major lenders showed.
At least two bank hire-purchase officers confirmed this while another said the rates at the bank where he worked would be increased this Friday.
Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said the hikes were likely to have a “small initial impact ” on car sales.
“Car companies may see a light impact at first but the increase is marginal and people will get used to the new rate,” she said when contacted by StarBiz.
Aishah said if there was any major impact, it would most likely be on companies that sold affordable, mass-market cars. “The high-end players would be less affected,” she added.
An EON Bank Bhd hire-purchase officer said the bank’s revised interest rates for new non-national cars were 3.5% (5-year tenure), 3.75% (7-year) and 3.85% (9-year).
Meanwhile, rates for new national cars now stood at 3.85% (5-year tenure), 4% (7-year) and 4.10% (9-year), he added.
Previously, new non-national car loan rates at EON Bank ranged from 3.25% to 3.5% while new national car loan rates were 3.75% to 4%, he said.
The last car loan rates increase was in March when the overnight policy rate (OPR), the benchmark interest rate that determines banks’ lending rates, was revised upward by 25 basis points.
On May 13, the central bank raised again the OPR by another 25 basis points to the current 2.5%.
Not too long ago, when the OPR was at a historical low of 2%, users used to pay only up to 2.8%
interest rate for a new non-national car.
At the rate of 2.8% over nine years, a person borrowing RM80,000 would have paid about RM70 less per month compared with the one that borrows the same amount but at the current rate of 3.85%.
Nevertheless, MAA’s Aishah said the association would not revise its total industry volume forecast of 550,000 units for 2010, given the steady consumer confidence.
In 2009, sales volume stood at 536,905. Year-to-date sales stand at 196,121 units from 162,075 in the previous corresponding period.
Nasim Sdn Bhd director Samson George was unperturbed by the rate hike, saying that it was unlikely to have any impact on the company’s sales. Nasim is the official distributor of Peugeot cars in the country.
“Higher interest rates will have an impact on car sales in general but the profile of our customers are different, as they tend to be more affluent.”
Earlier this month, Edaran Tan Chong Motor Sdn Bhd executive director Datuk Dr Ang Bon Beng said the second increase in OPR to 2.5% would not have a major impact on vehicle buyers.
However, should the rate be raised by another 50 basis points by the year-end as predicted by some economists, the motor industry would be affected, he said.
Proton Edar Dealers Association Malaysia president Armin Baniaz Pahamin said that after the first round of OPR hike this year, the company was expecting an “adverse impact” on sales.