No price hike for Mazda, Berjaya Auto confirms

KUALA LUMPUR: Berjaya Auto Bhd (BAuto) the official distributor of Mazda cars and spare parts in Malaysia (via Bermaz Motor Sdn Bhd) and the Philippines (through its 60%-owned Berjaya Auto Philippines Inc) is not in the mood of raising the selling prices of Mazda cars here anytime soon, despite surging production costs and a volatile foreign exchange. In fact the company witnessed a rise in share prices as much as 5 sen or 2.76% to RM1.86 after the announcement.

Although there won't' be any price hike, but the company is planning to forbid the extra discounts if the ringgit breaches the 3.8 level for every ¥100 yen, told yesterday, BAuto’s chief executive officer Datuk Seri Ben Yeoh Choon San reported to The Edge Financial Daily over the phone. It was reported that last week the ringgit was trading at 3.5121 for ¥100 yen.

Read Also: Ford Malaysia continues to maintain current selling prices

BAuto’s chief executive officer also said, “ As we move towards the end of the year, we are trying to hold back for customers. There is no point for us to increase the price under the current economic environment. If (the price of) everything starts to increase, it will not be good for the economic environment. So we will maintain the current selling price by reducing other expenses.”

He also mentioned that the group’s gross profit margin was under tremendous pressure now. Still the stressed group will only revise the selling price if the rising costs will exceed its limit.

“Although the Japanese yen has appreciated against the ringgit, the changes are not as drastic compared with the US dollar,” he said.

Read Also: Prices of Toyota, Lexus up by 4% to 16% from January 2016

Yeoh was also asked if the group would follow the measure taken by the Japanese automaker Toyota Motor Sdn Bhd, which announced earlier last week that the prices of Toyota and Lexus vehicles sold here by between 4% and 16% from January next year, due to the weakening ringgit against the US dollar.

Read Also: Honda Malaysia hints for car prices increase in 2016...

“I see BAuto having limited exposure to the foreign exchange rate. It may even be able to recognise some forex gains for the financial year ending April 30, 2016 (FY16). As such, I don’t think they will raise prices in the near term,” Yeoh added.

Kenanga Research’s analyst Desmond Chong released a forecast claiming that despite the falling ringgit, auto sales would gain momentum, driven by aggressive advertising and promotion (A&P) activities, festivities and stronger seasonal patterns.

Although he also said that, “On the flip side, we believe all these catalysts will be at the expense of margin erosion.”

Kenanga Research maintains its 2015 total industry volume forecast at 667,000 units, while BAuto remains its top pick in the sector, with an “outperform” call, and a target price of RM2.63.