“To further improve the approval rate for the buyer, Peda plans to meet all banks individually and better understand the banks' limitations and perhaps extend our feedback and proposal on how to expedite the loan processes and increase our approval rate,” Peda president Armin Baniaz Pahamin told StarBiz.
Following Bank Negara's new lending guidelines that came into effect on Jan 1, loans are now approved based on net income compared with gross income previously.
The new guidelines are intended to help manage the household debt in Malaysia to reasonable levels.Armin says the launch of the Prevé is timely because Proton must protect its market share in the ‘C-Segment.’
However, the new stringent rules have resulted in some potential car-buyers finding it more difficult to get their loans approved.
This, meanwhile, is having a direct impact on the sales of local automotive companies, especially those within the lower capacity passenger vehicle segment such as Proton and Perusahaan Otomobil Kedua Sdn Bhd (Perodua).
According to Armin, after the implementation of the new lending rules this year, Peda's dealership sales were immediately affected, with only 30% of applicants able to secure financing for new Proton cars in January.
However, he said that approval rates had since improved to 40% in March.
“But this is still far from the approval percentages before the lending rules were implemented. The duration taken for approval has improved from more than two weeks in January to one week currently,” Armin said.
He said Peda had already engaged with the central bank, the Malaysian Automotive Institute and the Ministry of International Trade and Industry on two occasions to iron out issues relating to the new hire purchase (HP) rules.
“We believe this (the meetings) may have contributed to the improvement in the overall HP loan-application approval percentage,” he said.
Last week, Perodua announced that its vehicle sales fell 11% in March to 16,000 vehicles versus 18,000 units in the previous corresponding period, mainly due to Bank Negara's responsible lending guidelines implemented this year.
It said sales eased 2.2% to 44,700 vehicles in the first quarter of this year from 45,700 vehicles registered in the previous corresponding quarter.
In a statement by the company last week, Perodua managing director Datuk Aminar Rashid Salleh was quoted as saying that the current loan approval rate by financial institutions was much lower than usual due to the new guidelines, adding that loan approvals were also delayed.
“Due to this delay, it takes an average of 20 days to know the outcome of a loan application instead of three days previously, and this is having a huge impact to not just the manufacturers but also to the entire automotive eco-system,” he said in the statement.
Aminar also said that the loan rejection, as well as delay in the loan approval process, had resulted in high inventory levels at Perodua's stockyards, which in turn had increased cost for the independent dealers.
On another note, Armin said the launch of Proton's newest model, the Prevé, could not have been more timely.
“Yes, it is timely because Proton must protect its market share in the “C-Segment” that is now being represented only by the (Proton) Persona when the Proton Waja was phased out.
He pointed out that marketing research and analysis firm Frost & Sullivan had forecast that the biggest growth in the automotive industry this year would be in the C-segment.
“(This is something) our dealer network will capitalise on with the new Proton Prevé. The C-Segment dominates more than 25% of the total industry volume,” Armin said.
The Prevé was launched last week.
“For April and especially with the launching of the Prevé, we trust the approval rate will further improve, given the buyers' demographic is not in the most affected segment by the lending guidelines.
“The lending guidelines affect new graduates, the lower and middle-income group as well as small business owners,” added Armin.
-Star motoring
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