Luxury car sales are up and yet property transactions are falling?

Last year, many friends changed new cars. Except for me who traded in my Persona for an Exora, all of them changed ‘better’ cars. Yet, these same friends were the ones who kept complaining that money has depreciated, so many things have become so expensive and GST will somehow kill the economy. As usual, they would tell me that they can save more fuel with their cars. Read here: Sen Wise, Ringgit foolish In conclusion, a bad year of 2015 for Malaysia, I heard? Recession even, some say even if totally untrue. Read here: Malaysia in recession? Not in 2015

Well, as per reported in a local media, for Malaysia’s largest Mercedes-Benz motor vehicle dealer Cycle & Carriage Bintang Bhd (C&C Bintang), it was an extremely good year. It’s net profit is up by five times to RM52.12mil for 2015 when compared to the year before. This came about from higher revenue as well as 55 percent up in sales, helped by the hybrid models. These days, driving luxury is no longer enough for some. It must be luxury plus caring for the environment. (Do note though that for the car to only use the electricity portion, most of the time, it must be driven in low speeds….) One day, when I am as rich as them, perhaps I would do the same thing. Haha.

In comparison, the whole automotive sector barely moved last year as per The Malaysian Automotive Association. With these great numbers, should it not reflect a better market sentiment? Actually, total property transactions are still dropping. Retail spending seemed to be weak. Many who wanted to buy are now waiting to buy. Actually, a better way is to buy your first home, stay in it and wait. It usually works way better than waiting to buy. In terms of the opposite direction between the sales of luxury cars versus the appetite for properties, we should be a little more analytical. The prices of many ‘liveable’ areas such as Desa Parkcity and some condos in Mont Kiara or even Bangsar are still holding on strongly. Why? Answer is the same as that of luxury cars. The number of people getting richer are increasing too.

We should not have the wrong assumptions that bad times are the same for everyone. Many times, it is during these trying times that opportunities open up. Read here: In a slowing market, sanity returns. How true Do you know why good businesses set up during bad times fare better? Well, setting up costs lesser and there are far fewer competitors too. Due to these lower cost structures, once business volumes pick up, the business would achieve far higher economies of scale compared to a new business being set up during good times with higher costs and much more competition. As many property gurus would say, we should buy when there are many desperate sellers. We should start selling when everyone is queuing to buy desperately. This really did happen towards the end of 2012. Happy waiting for the start of a new cycle….

written on 24 Feb 2016

Next suggested article: Lower car sales growth, not a good sign

 

 

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