Costlier financing may slow bookings: Honda

 

A MOVE by Malaysian banks to raise the hire-purchase rates for non-national car effective this month may hurt sales, the head of Honda Malaysia Sdn Bhd says.

"About 95 per cent of our customers use loans to buy cars and the one percentage point increase is quite drastic. We are pretty concerned," managing director and chief executive officer Toru Takahashi said.

"(But) as long as Honda's business is holding on because of the good acceptance of our new models, we shouldn't see a big impact from the higher rates," Takahashi said.

He said Honda has yet to see any impact from the higher car financing rates because banks are still giving the old rates. From this month onwards, the interest rate on a seven-year loan for non-national cars like Honda will go up to 3.4 per cent, from between 2.3 per cent and 2.5 per cent previously.

The increase effectively narrows the gap of financing rates between non-national cars and local makers like Proton.

Still, the change "will unlikely cause a structural shift of buyers' preference from buying non-nationals to national cars, given the higher income levels of these buyers," OSK Research wrote in a note late last month.

The change will only result in a RM56 increase in monthly installment on a five-year loan for Toyota Vios, the top-selling non-national model, OSK calculated. This is assuming a 3.25 per cent interest rate and that the buyer puts in 10 per cent down-payment for the RM73,525 on-the-road price for Vios.