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Tuesday, December 09, 2008

Automakers to decide on production cut in March

PETALING JAYA: March will be a crucial month as local automakers will decide then if they need to cut production.

According to Perusahaan Otomobil Kedua Sdn Bhd (Perodua) managing director Datuk Syed Hafiz Syed Abu Bakar, it’ll be business as usual in the short term but March will be the determining month.

“There is no slowdown for now as we’re building up stock ahead of Chinese New Year. February is typically weaker as it’s a shorter month. We’ll be monitoring the situation if we need to revise the (production) numbers,” he told StarBiz.

MIMB Investment Bank analyst Rosnani Rasul said local carmakers should take the cue from the global market as international carmakers like General Motors, Toyota and Nissan Motor were slashing production next year in anticipation of declining demand.

“I don’t see how Malaysia’s auto players could be insulated if the worldwide sector is seeing such trend. Next year’s first quarter will give an indication if they need to review production plans,” she said, adding that demand was subject to interest rates, new models and fuel prices.

Meanwhile, Syed Hafiz said Perodua was anticipated to sell 158,000 vehicles next year, down 5% from this year’s anticipated sales of 167,000 units. In 2007, it sold 162,000 units.

Total industry volume is expected to fall next year to about 490,000 units from this year’s estimated 510,000.

“We’re going back to levels last seen in 2006. The journey forward is expected to be bumpy for us due to steel prices and the strengthening of the yen against the US dollar,” Syed Hafiz said.

Nonetheless, Perodua’s models are still in good demand as they’re fuel efficient and affordable.

“People will continue to look for small cars because of fuel prices. Even though petrol prices are coming down, you’ll never know when they can go up again. People’s disposable income is also shrinking,” Syed Hafiz said, adding that Malaysian banks were not tightening hire purchase loans.

National carmaker Proton Holdings Bhd, meanwhile, expects the next two quarters to be tough.

Managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir, in a recent press conference, indicated that the group had to be “more realistic” about future numbers.

“Proton would review this on a regular basis to see if there’s a need (to cut production volume),” he said, adding that it would continue its cost cutting measures as well as explore new markets.

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Low price and no other choice due to budget
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Low maintenance cost
Ride & Handling is good
Reliable parts, chasis and engine
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