PUTRAJAYA’S latest aid package Pemulih offers little help to those in the automotive industry, said auto dealers.

They said many businesses that are suffering from cash-flow problems would not benefit from the automatic loan moratorium granted under the package.

They added that the best solution was to allow car and motorcycle retailers to reopen for business. The retailers are presently considered non-essential and will remain shut during the phase one of the National Recovery Plan.

Teh Seng Hap, president of Negri Sembilan Car Dealers and Credit Association, said 20% of the auto industry would be forced to suspend business if the government does now allow them to operate soon.

“Many auto dealers rely on bank loans to purchase stock but now they can’t move their stock as they are not allowed to operate. This is a big blow to their business,” Teh told The Malaysian Insight.

He said in the case of second-hand car dealers who may not be eligible for bank loans, they would have borrowed elsewhere and would not be able to benefit from the moratorium.

They too are facing the problem of having too many second-hand cars but are unable to sell them to repay their loans and cover various expenses.

“We have to pay rent and hire staff to look after the cars in the shop. Although we can’t open, we still have to pay for electricity.”

Moratorium helps buyers, not dealers

Teh said the automatic loan moratorium announced by Prime Minister Muhyiddin Yassin was more helpful for individual buyers and small and medium enterprises but not for auto dealers.

He said the government should take a closer look at all the industries instead of allowing only key sectors to reopen.

The said auto dealers do not employ a large number of people, unlike industries and factories that employ a large number of people and have contributed to a large number of clusters.

He said small car dealers might have only three to five workers while medium-sized dealers don’t have more than 10 employees. Large car dealers may employ more than 30 people but they are not in close contact everyday.

“Small car dealers may only see five customers daily who come to discuss prices and inquire about other things. Medium-sized dealerships may deal with five to ten customers while large dealerships may face up to 50 customers daily.”

Compared to key industries that are currently allowed to operate, where they deal with thousands of people on a daily basis, Teh said the government’s argument that dealerships are not allowed to operate due to crowding is hard to accept.

He said the association has written to the International Trade and Industry Ministry (Miti) to appeal their case.

Teh also said limiting the number of workers for small businesses did not make sense as most times the workers were made up of the boss, one salesman and one car wash worker.

He said if they were allowed to reopen but with only 10% of the workforce, it would be impossible to do any work and they might as well not open.

“We recommend that small car dealers have no more than five employees at the shop. Larger dealers who employ 30 salesmen and eight secretaries may be able to follow the government’s guidelines.”

Motorcycle dealers struggling as well

Wee Hong, president of Malaysia Motorcycle and Scooter Dealers Association, said the aid package was of little help to them.

He said dealers were still not allowed to open. Only motorcycle repair shops are allowed to open under the lockdown.

“Maintenance is not our main business. It’s not very profitable. It’s not enough to pay the rent,” he said.

Wee said he was struggling and had no choice but to wait for the government to allow him to reopen.

Motorcycle dealers are also having a hard time keeping their business afloat as they still have to pay salaries even when they are not making any money at the moment.

Like Teh, Wee too has written to Miti to appeal his case but has yet to receive a response.

Though dealers have pivoted to selling online, Wee said as automotive factories are only allowed to operate with limited workforce, leading to a shortage in inventory.

Those who want to buy motorcycles may have to wait a long time.

To mitigate this problem, Wee said the government should increase the number of workforce at the factories to 60% capacity instead of 10% to ensure there is enough supply.

Meanwhile, Tony Khor, president of Federation of Motor and Credit Companies Associations of Malaysia, said the Pemulih aid package was timely and will allow the market to be more active.

He said the lockdown has impacted the sale of cars, especially in June as relevant authorities such as the Road Transport Department (RTD) were not open.

RTD resumed normal operations yesterday and Khor believes this will allow dealers to conduct necessary tasks in person.

“Businesses that are not allowed to open have pivoted to selling online to adapt to the new normal.

“The government’s aid should help, and the automatic moratorium will help a lot. Many people will benefit, and it will help to subsidise employees’ salaries, which will help the industry,” he said.

On Monday, Prime Minister Muhyiddin Yassin announced the RM150 billion Pemulih aid package to help individuals and businesses get through the lockdown.

Under this package, businesses are entitled to a six-month loan moratorium and wage subsidies.

Including Pemulih, Putrajaya has announced stimulus packages worth RM530 billion. – July 2, 2021.