KUALA LUMPUR: Approximately 80 per cent of Proton and Perodua car buyers opt for loan periods of up to nine years, with some even extending the period further if permitted to do so, said AmInvestment Bank.
The investment bank, in a research note, said that Proton and Perodua cars are the top choice for demographics with moderate to lower incomes.
The vehicles are also considered as a consumer necessity rather than a luxury for such income demographics.
"Their priority is the monthly instalment payments. Their financial balance is influenced by the prevailing interest rates.
"The everyday people closely monitor the Overnight Policy Rate (OPR) as their financial situation aligns with it. This is a factor that the government cannot overlook.
"Bank Negara Malaysia (BNM) has maintained the OPR rate unchanged at 3.0 per cent since May last year," it said.
AmInvestment Bank also said that applications and approvals for car loans are currently maintaining a strong rate, especially for the Myvi model.
It said that demand for this vehicle is very high, with delayed deliveries extending into the previous year, driven by buyers rushing to purchase due to ongoing needs and concerns about potential future OPR increases, which would raise car ownership costs.
The research firm said that purchases for used vehicles are also still high at present and show no signs of being affected.
This was because, in mid-2023, some manufacturers faced supply chain issues, resulting in lower production, thereby causing excess demand in the used car segment.
"Sales are strong, but mostly for the affordable car segment, especially those made in Japan and domestically.
"Moreover, the current trend also shows buyers avoiding purchases of cars with large engine capacities. This may be due to concerns about fuel subsidy rationalisation," it said.
Separately, the investment bank said that based on observations at car showrooms, there is high interest shown in Battery Electric Vehicles (BEVs), with some potential buyers considering fuel savings compared to electricity costs.
It said that it cannot be denied that BEVs are currently the focus of car enthusiasts, especially among the T10 income group who view such vehicles as 'toys', suitable for weekend use.
"Of all the EVs (electric vehicles) purchased, customers opt for loan periods of five years, and some even pay cash, which is a common practice among the elite T1 group.
"Furthermore, various tax exemptions such as excise duties, sales tax, and road tax make BEVs a worthwhile investment for the elite," it said.