Most factories are located in the Klang Valley and the production of cars has been at a standstill since the beginning of June, when the lockdown began.
A salesman who spoke to FMT but declined to be named said he had about 20 customers still waiting for their cars. Some of them made their bookings in February, he added.
With no end in sight to the lockdown, they will have to continue waiting.
The salesman said three of his clients had decided to cancel their orders. Cancellations used to be rare, he added.
He said there was a trickle of sales in June but there were no new orders at all last month. He had been forced to dip deep into his savings, he added.
“Despite the extension of the exemption on sales and service tax,” he said, “customers are reluctant to make bookings because we don’t know when we can produce the cars.
“Those who have booked their cars are constantly messaging me about the progress of their orders. I have to tell them that factories cannot operate and that I can’t give a concrete answer.”
He speculated on the possibility that the Covid-19 situation would not allow factories to reopen until December. If that were to happen, he said, small dealerships would close down.
An industry player who also asked to be anonymous said local brands had been hit badly by the closure.
Before the lockdown, he said, parts manufacturers had told vendors to keep stocks high because they expected the demand to be good. Over the past two months, he added, vendors had been saddled with stock holding costs.
He said another concern was over letters of undertaking (LOUs) issued by banks for the purchase of cars. These usually have a three-month validity period.
“Any LOU that has lapsed must be submitted to the bank with the customer’s documents again for a fresh review,” he said.
“We don’t know if the banks would be more strict or if they would try to assist. If they decide they want to review every single one, then we have to resubmit. Additional documents could be asked by the banks to support this, and that is going to take time.
“My gut feeling is that more time will be needed to recover and get back to normal,” he said. “It could take until next year because OEMs (original equipment manufacturers) are now very careful about production, unlike during the first half of the year.”
MAA president Aishah Ahmad told FMT the lockdown had been “disastrous” for the industry.
She said pay cuts and retrenchments might be inevitable should restrictions remain.
“The order bank from auto companies varies from brand to brand but dealerships are still collecting orders because of the SST exemption,” she said.
“However, the continuation of Phase 1 (of the national recovery plan) with showrooms and production not allowed to operate from June 21 is most disastrous for the auto industry, and we are appealing to the government to allow both to be opened up soon.”
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