Proton Commerce Sdn Bhd (PCSB), a joint venture between Proton Edar Sdn Bhd and CIMB Bank Bhd, is projecting a growth in its hire purchase loan portfolio for the rest of 2020. PCSB was incorporated in 2003 and acts as the in-house financier for automotive hire purchase by offering competitive rates and fast approval processes to Proton buyers.
The key reasons for the expected uptick in loans growth are the government’s PENJANA stimulus package which offers a sales tax exemption on new cars, as well as the impending launch of the X50 compact SUV. The sales tax exemption will end on 31 December 2020 with no news of an extension as yet, and this is expected to continue driving some sales this year.
Other growth factors for the last quarter of 2020 include the recent reduction in the Overnight Policy Rate (OPR) by Bank Negara which allows PCSB to offer more competitive prices to customers. PCSB is currently offering interest rates from as low as 2.19% for the Proton X70, which is on par or lower than other HP providers.
“As a finance provider for Proton vehicles, PCSB is committed to offering competitive financing rates for Proton customers. As Proton continues on its upward trajectory, PCSB will continue to play a major role in ensuring more Malaysians are able to own a vehicle from Malaysia’s national automotive brand,” said Mooi Fi Phang, Chief Executive Officer of Proton Commerce Sdn Bhd.
For the last three financial years i.e. FY2017 – FY2019, the hire purchase sector has seen growth in the 1.0% – 2.0% region. This is largely in tune with the Total Industry Volume (TIV) of the automotive market in Malaysia. However, automotive sales had slowed in the first half of 2020, contracting by about 1% year-on-year, due to manufacturing and consumption disruptions caused by the pandemic.
Despite this, PCSB’s loan assets maintained a Compound Annual Growth Rate (CAGR) of 21% from FY2018 to the current period. In July 2020, PCSB had registered a historical high in its disbursement value and number of contracts that accounted for approximately 15% of overall Proton sales for the month. This is mainly attributed to the competitive rates offered by PCSB as well as the rebound in Proton car sales after the Movement Control Order (MCO) period. As at 31 August 2020, PCSB had surpassed its year-to-date volume of 2019.
“PCSB is expecting the number of HP sales for the industry to rebound in the second half of 2020 thanks to the PENJANA stimulus package offered by the government that seeks to grow automotive sales via a sales tax exemption package until 31 December 2020. We are also expecting a boost due to the huge interest in the upcoming Proton X50, which will have an impact for both the last quarter of the year and probably into 2021,” added Mr Mooi.