Toyota to increase prices in Malaysia

There has not been much good news for the Malaysian car sector of late, with sales of new cars - since the introduction of the Goods and Services Tax (GST) - having fallen and the industry now facing a slump in demand. Across the board since April, when the GST was introduced, there has been more than a 10% fall in sales with just a few brands in positive territory.

Comparing August to July of this year, locally manufactured and homegrown favourite, Perodua, lost 7.6% and Proton lost almost 17%. Volkswagen was also a big loser and saw sales decline by 27%. But perhaps the biggest surprise was the downturn over at Audi, where sales declined to a mere 103 units - a 48% reduction.

Some brands saw modest increases, amongst them Suzuki, Chevrolet, Mini and Renault, who all sold less than 50 cars each for the month of August. Toyota was the big winner with an increase in sales from 7,308 units in July to 8101 units in August, which is a 10.9% jump.

But there is bad news coming for all Toyota dealers in Malaysia after UMW Toyota Motor Sdn Bhd, the distributor for Toyota and Lexus cars in the country, announced a major price hike as it struggles to cope with the weaker Ringgit. The price rise will come into effect in January and varies between 4% and 16% across all models.

Datuk Ismet Suki, UMW Toyota’s President, said in a statement: “The increase is inevitable as there is no clear indication on when the Ringgit will rebound. We have tried our best to keep price rises as minimal as possible. The sudden and huge fluctuation of the Ringgit within such as short space of time has had a great impact on our operation.”

Year to date, the Ringgit has fallen more than 20% against the US Dollar, caused both by domestic political scandals and international economic forces; unfortunately for the Malaysian economy, the fall may well continue. Datuk Ismet Suki commented that should the fall continue, then UMW Toyota would review their prices again and adjust accordingly.

The weaker Ringgit has resulted in higher production costs for all manufacturers that assemble locally but import much of the components for the vehicles, and Hyundai and Ford have both raised their prices as well.

“With the increase in the US Dollar against the Ringgit, the company has had no choice but to pass some of the cost on to the consumer to offset rising input costs. With the increase in the price, we can only partially recover the additional costs which we have been absorbing over the past few months,” Suki added.

It is not just bad news for the manufacturers. Owners of Franchised Dealerships are starting to really feel the pinch, with many claiming that business has shrunk by as much as 50% since the start of the year, citing low new car sales, increased service intervals of more than 10,000 kilometres, increased brand competition and aggressive sales and marketing campaigns by the new kids on the block, robbing them of turnover.

image: Free Malaysia Today