UMW Toyota facing difficult times due to poor consumer sentiment and weak ringgit

It’s certainly not a bed of roses for UMW Holdings Bhd this year, especially not after losing their coveted number one spot in the non-national automotive segment and recording lower year-to-date revenues (RM2.60 bil in 2015, compared to RM2.64 bil in 2014; by end of Q3), according to a report by The Star.

UMW Holdings attributed the lower revenue to stiff competition from other players in the market and admitted to suffering from ‘weak consumer sentiment’. The weakening ringgit also played a major role here, as have higher campaign and promotion expenses. To mitigate this, UMW Toyota Motor Sdn Bhd have announced that beginning January 2016, both Toyota and Lexus cars will see a slight hike across both model ranges. 

An analyst from a bank-backed brokerage revealed that the ringgit’s poor performance will have a huge impact on UMW Holdings Bhd and Tan Chong Motors Holdings Bhd in 2016. He said, “These players have rather high-denominated US dollar costs, primarily because of the import of CBU vehicles, CKD kits and other parts and components that squeeze margins.”

On the flip side, analysts are optimistic on the outlook for Berjaya Auto Bhd which distributes Mazda vehicles. During a press conference at the launching of the new Mazda CX-3, Berjaya Auto’s CEO, Datuk Seri Ben Yeoh said prices for Mazda vehicles will not increase because the company trades in Yen which has been stable against the ringgit. The monetary stimulus implemented by the Bank of Japan also helped the yen to stay soft.2015 Mazda Showroom

Meanwhile, Proton revealed that pricing for all their cars will go up beginning January 2016. Honda too, have said that their cars will cost between 2 to 3 percent more next year, compared to Toyota’s 4 to 16 percent.


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