It seems that the new guidelines issued by Bank Negara Malaysia to try and cultivate responsible financial management among Malaysians have reached a hurdle as far as the automotive industry is concerned.
The guideline was announced last November that came into effect on January 1 this year have created a bigger problem for the industry instead of the people.
The MAA (Malaysian Automotive Association) said that with the new regulation enforced, there has been a 25% drop in new car sales for that month. The new restrictions has caused many loan applications to be rejected and this is not doing the industry any favours. According to the new guidelines, the hire purchase loan will now be calculated based on the net income of the applicant and no longer based on the gross income as practiced before.
Hence, the PEDA (Proton Edar Dealers Association Malaysia) has called on the government to review the new amendments to the Hire Purchase Act and they are planning to meet up with Bank Negara to try and discuss a better solution because since the enforcement, only 30% of applications were approved. PEDA claims that because of that, everyone concerned in the industry have suffered and that includes the car dealers and sales advisors whose commission earnings have dropped considerably.