The firstproblems Tan Chong Motor Holding Berhad (TCMHB) faced is suffering a loss ofRM59,000,000.00 according to annual report 2016 after more than a decade ofprofitability. In addition, at the first quarter of 2017, the market still poordemanding on new vehicle and caused TCMHB struggle financially. When thefinancial approval is stringent, it is more difficult for buyer to apply loan. Onthe other hand, purchaser demand for automotive sector is low in currenteconomic environment.
Hence, TCMHB expects domestic automotive sector continueschallenging (Hafidz, 2017).Besides, therevenue declined in result from overall little consumer demand. At the sametime, the earnings before interest, tax, depreciation and amortization decline.The sales of division of insurance and hire purchase business is drop whencompared to previous year, result from poorer number of motor insurancepolicies (Tan Chong Motor Posts RM37m net loss in Q1, 2016). Moreover, the confidenceof purchasers remains low toward domestic automotive sector and the volatilityof the global and domestic economic situation.
TCMHB is required continue disciplinedand focused on key priorities going forward (Wong, 2017).Furthermore, managementof TCMHB forecasts a challenging outlook for the domestic auto sector. Thereasons are because softer consumer demand and stricter financing approval forhire purchase loan from banks. Another causes of revenue declined is lack ofnew Nissan model launches during the year. However, no new model planned to belaunched until 2018. New model seemed difficult to stimulate sales.
In fact,domestic auto sector market remains challenging since weak consumer sentimentand tighter financing approvals (Tan Chong Motor below Expectation, 2017).In short, TCMHBis assuming to face another weak quarter in current situation. As TCMHB remainnot bringing any new models in to the market, the sales is remain poor and theproblems is bringing to the rest of the year. Weak consumer sentiment andstringent hire purchase approvals lead to car sales assumption reduce significantly(Farah, 2017).