In Malaysia, a whopping 80% of Proton and Perodua car owners are stretching their loan tenures to nine years, driven by a quest for manageable monthly payments. Am Investment Bank reveals that these buyers are fixated on keeping their installments affordable, which are deeply sensitive to the whims of interest rates.
For the nation’s lower- to middle-income segments, cars are an indispensable necessity, and their financial equilibrium is intricately linked to the overnight policy rate (OPR), which wields serious influence over their financial fate.
Despite concerns about potential interest rate hikes, vehicle loan applications and approvals remain strong, particularly for the popular Perodua Myvi. Meanwhile, demand for used vehicles remains high due to supply chain issues and lower production last year. Interestingly, buyers are showing a preference for affordable cars with smaller engines, possibly due to concerns about fuel subsidy rationalization.
On the electric vehicle (EV) front, AmInvestment Bank observes strong interest in battery electric vehicles (BEVs), with potential buyers comparing fuel savings to electricity costs.
While BEVs are popular among the high-income group, who view them as “toys” for weekend use, they also offer attractive tax exemptions, making them a worthwhile investment for the elite.
Unlike traditional vehicle loans, BEV purchases often involve shorter loan periods of five years or cash payments, reflecting the different priorities and financial capabilities of this demographic.