Kuala Lumpur (VNA) - The closures of factories and sales outlets during the MovementControl Order (MCO) will result in an estimated 28 percent drop in new vehiclessales this year.

In making the forecast, Malaysia Automotive, Robotics and IoTInstitute (MARii) said 2020 was no longer a year of profit for the automotivesector, but rather a year of survival, the  New Straits Times reported.

"In order to sustain the industry for the year ending 2020,MARii estimates that a TIV of at least 500,000 units is needed, in order toensure that automotive businesses do not fall into crisis," MARii chiefexecutive officer Datuk Madani Sahari said in a statement on June3.

"While it is understandable that consumer sentiment remainscautious due to the current economic challenges, we must also understand thatthe economy's sustainability is dependent on consumer spending," Madaniadded.

Last year, a total of 604,287 new vehicles were sold, anincrease of 5,689 units, or about one percent over the 598,598 units recordedin 2018.

According to a study conducted by MARii, temporary measures hadshown an increase in vehicle purchases in the past.

The previous measures such as tax holiday had pushed vehiclesales by 3.8 percent year-on-year.

Madani said innovative incentives can be introduced to lowerbuyers' commitment to own a car.

This could include a temporary waiver on down payments (100 percentloan on vehicle), reduced loan interest rates and joint subsidies betweencarmakers and the government for road tax and insurance for a limited timeperiod.

He said a combination of the incentives would remove the burdento buy a car.

At the same time, this will not affect purchasing power as therewill be a negligible difference between the monthly repayment amount for carbuyers, at any level or segment.

The study said other innovative mechanisms can also beintroduced, such as "subscription-style ownership" – in which a caris leased based on certain conditions from the carmaker for a period of timebefore ownership is transferred to the buyer.

For owners of very old vehicles, voluntary scrap incentives bythe carmaker can also be made an option, where the main benefit is a newer,safer vehicle with the latest technology for the new car owner.

"MARii believes that it is important to stimulate demandthrough the introduction of incentives to reduce consumer anxiety and addresstheir concerns in purchasing vehicles, especially when they need to purchasenew vehicles to continue on with their daily routines," it said.

There are currently 27 original equipment manufacturers (OEMs)operating in Malaysia, with 641 parts and components suppliers depending oncontinued economic activity along the automotive value chain.

The automotive sector employs around 700,000 people, which makeup a significant portion of the manufacturing sector in the country.

According to the Department of Statistics, 30 percent of themanufacturing sector's workforce has been impacted by the COVID-19 economicslowdown, and are receiving half-pay, unpaid leave or have lost their jobs./.