Loan caps slow down July car sales

National 2 minutes, 0 seconds


CAR sales in July fell by 14.8 per cent from the previous month as the new regulations set by the country’s central bank tightened credit availability.

According to the latest statistics from the Brunei Automobile Traders Association (BATA), 1,137 passenger and commercial vehicles were sold in July 2015 compared to 1,334 in June.

An industry insider said the loan cap announced in May by the Autoriti Monetari Brunei Darussalam (AMBD) made it harder for potential buyers to get access to financing.

“There are a lot (of customers) that want to buy but they were not able to get approval (from banks),” the insider told The Brunei Times.

The loan cap or total debt service ratio (TDSR) is set at 60 per cent for those earning a minimum net salary of $1,750. The TDSR was implemented to limit an individual’s monthly debt obligation.

As for those earning below the minimum net income, the TDSR is set by the banks, subject to AMBD’s approval to ensure that the financial institutions practise responsible lending.

In June this year, a sales official who requested anonymity said car sales were not expected to peak during the festive season, continuing a trend in declining automotive sales brought by limited credit access.

During the first half of last year, the automotive market saw sales fall by 2.4 per cent from the same period in 2013 following reduced access to vehicle financing.

In December 2013, HSBC advised car dealers that it will stop offering car loans following AMBD’s implementation of new lending and deposit rates.

HSBC’s exit left a 30 per cent market share to Baiduri Finance and Bank Islam Brunei Darussalam At-Tamwil Berhad, both of which offer car financing.

Standard Chartered Bank Brunei, which stopped car financing in 1997, ruled out the possibility of reintroducing its hire purchase facility as it “is not the strength of Standard Chartered”, its former CEO Lai Pei-Si said in a September 2014 report.

BATA said in its latest report that Japanese brand Toyota, distributed by NBT (Brunei), maintains its position as best-selling brand with 187 units sold in July this year.

Korean car brand Kia, distributed by Grand Motors Sdn Bhd, managed sales of 161 units followed by Suzuki, distributed by Boustead Sdn Bhd, with sales of 132 units.

Cars in the 1,301-1,500cc category retained its top spot in sales from June with 294 units followed by the 1,501-1,600cc and 2,001-3,000 with sales of 162 and 142 units, respectively.

The Brunei Times