Two key issues car dealers want Govt to look into

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Two key issues car dealers want Govt to look into

Postby admin » Thu Mar 12, 2009 11:13 am

PETALING JAYA: Car dealers want the banks’ credit risk scoring system and second hand car valuation looked into so that car sales are not affected.

Proton Edar Dealers Association Malaysia (Peda) acting president Armin Baniaz Pahamin said while the RM200mil allocation in the Automotive Development Fund under the mini-Budget would support and strengthen the automotive sector, it would not resolve the two major issues facing the industry.

“The main issue is the banks credit risk scoring system becoming more stringent for car buyers to obtain loan approval,” Armin said in a press statement yesterday.

He said the second issue was the low valuation of the second hand car market.

Second hand car valuation is significantly less than an existing car balance loan amount especially if it is still within the first five years of financing.

“It will hinder customers from trading in (their cars) as 90% of them want to trade in but 80% of them can’t find a fair price for their car,” he added.

Armin said that if banks continued to value cars at a higher risk given the recession and reject loan submissions, the automotive car sales would be affected.

Besides that, he said, the auto scrap policy would spur some interest among customers with cars of 10 years or more but it would not increase sales significantly because of the difficulty in getting loans approved.

“Most owners of 10-year-old cars will not trade in their vehicle for RM5000 because they would have already paid the full car loan,” he said, adding that many would not want to be burdened with monthly repayments given the present economic scenario.

Kuala Lumpur and Selangor Car Dealers and Credit Companies Association president Khoo Kah Jin agreed that having a scrap policy was crucial for the industry to move on.

But he added that it had to be an open policy and not limited to Proton and Perodua cars.

“This system just won’t work if the Government is bent on protecting Proton,” he said.

He said the Government should give RM5,000 vouchers to owners who want their cars scrapped so that they can have the option to choose another second-hand car in better condition because not many people can afford the price of new cars.

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