Falling Ringgit To Affect Car Prices In 2016
UMW is set to increase the prices of all its Toyota and Lexus vehicles by 4% to 16% effective January 2016, due to the weakened Ringgit.
With the Ringgit depreciating by 20% year-to-date against the US dollar, UMW’s overall cost of production has increased. The fluctuation of the Ringgit has impacted their business as some of their parts and components are imported.
UMW implemented strategic cost-efficiency measures to minimise forex losses impact and address the fluctuation of Ringgit to protect the interest of its customers, while absorbing the additional cost.
However, in the near future they will have to pass on some cost to the consumers to offset rising input costs due to the strengthening of the US dollar against the Malaysian currency.
The increase is inevitable as there is no clear indication on when the Ringgit will rebound.
Even with the price increase, they could only recover part of the cost they had been absorbing. If the Ringgit continues to slide in the near future, UMW may need to review their pricing structure again.
More car manufacturers are expected to raise car prices, including our local Malaysian made cars.
Perodua said it may increase the selling price of its car models too if the Ringgit continues to depreciate against the US dollar. Although 90% of its components are built locally, Perodua imports the remaining 10% of automotive parts from overseas, with most of them paid in US dollar.
However, Mercedes-Benz Malaysia has assured customers that there will be no price increase for all its car models in the near future amid currency fluctuations.
Mercedes-Benz uses various financial instruments and measures available in order to compensate and to have a long-term steady pricing strategy. Although it is equally impacted by the volatility of the Ringgit, it will maintain prices of its vehicles in the interest of its customers.
If there are greater fluctuations in the long-term, that Mercedes-Benz will have to review it eventually.