In a crisis, Perodua achieved one of its best sales ever. During the financial crisis of 2007/2008, the company achieved the most bookings in its 15-year history in July 2008.

The managing director then was quoted as saying: “We were in Nirvana.”

However, things seems to have changed. People have been holding back purchases in times of uncertainty while financial institutions have seen lower profits and higher doubtful debts.

Last Thursday, Perodua announced that its sales fell by 17.4 per cent in the first quarter from 57,200 units a year ago.

“On a month-to-month basis, Perodua sold 17,300 vehicles in March 2016 against 22,400 units in the same month last year, a drop of 22.8 per cent,” Perodua president and chief executive officer (CEO) Aminar Rashid Salleh said.

He attributed the decline to consumers rushing to buy their vehicles before the implementation of the goods and services tax (GST) in March last year. The GST came into effect last April 1.

Malaysia Automotive Association (MAA) forecast Malaysia’s total industry’s volume to drop by 2.5 per cent to 650,000 units in 2016 against last year.

The automotive industry grew for six consecutive years from 2010, and peaked at a new all time total industry volume (TIV) high of 666,674 units last year, albeit at a marginal increase of 0.03 per cent against 2014.

The lower car sales, slower property market and slowdown in household loan growth could be a grim reading on the health of the country’s consumer demand and the challenging times.

Besides residential properties, cars would be the most expensive purchase most consumers would make in their lifetime. This explains why economists look to car sales to gauge the country’s economic performance.

According to analysts, the rising cost of living coupled with a series of subsidy rationalisations, higher car prices by major marques, relative to the lower disposable income will weigh on car sales with more downside pressure to be seen among national marques whose buyers are more sensitive to the cost of living.

“People don’t buy big ticket items when there is uncertainty about the economic outlook. Car dealers are sacrificing their margins and giving out big incentives to help attract buyers. The sense of consumer optimism does not appear to be strong,” an analyst said. In February, the country’s inflation rate rose at a faster-than-expected pace of 4.2 per cent from a year ago following higher food prices and a jump in alcoholic beverages and tobacco.

The Statistics Department said the Consumer Price Index (CPI) for February rose by 4.2 per cent to 114.5 compared with 109.9 a year ago. Economists had forecast a 4.1 per cent increase.

Another element to this is the consumer credit. Banks have been imposing stricter lending rules over the past year for loan applications and approvals have shown a contraction.

Maybank Investment Bank Research sayid industry loan growth continues to slow, with the moderation in household loan growth notably more significant in February 2016.

“While still early days, our 2016 industry loan growth forecast of 6.5 per cent (7.9 per cent in 2015) is still within reach and this is premised on household loan growth of just 6.1 per cent and non-household loan growth of 7.0 per cent,” it said in a recent report.

It noted that loan applications rose 5.5 per cent year-on-year on a three month monthly average basis but loan approvals contracted for the sixth consecutive month by 10 per cent year-on-year in February 2016.

Association of Banks Malaysia (ABM), group president and CEO Datuk Abdul Farid Alias said the overall rejection rate for housing loans in Malaysia last year was only 20.39 per cent.

“The total number of applications for housing loans to all banks in Malaysia was 456,000 and of this number, 93,000 applications were rejected,” he added.

For loans where principal amount borrowed was less than 500,000 ringgit, the rejection rate was 19 per cent.

Loans between 500,000 ringgit and 1 million ringgit saw a 20.71 per cent rejection rate, between 1 million ringgit and 3 million ringgit saw 25 per cent loans rejected, and those over 3 million ringgit saw 36 per cent being turned down.

Between January and February this year, the overall loan rejection rate was at 20.6 per cent.

Retail Group Malaysia (RGM), which tabulates quarterly retail data, said the retail industry in the first three months of this year is expected to register a negative growth of 0.4 per cent, compared with the same period a year ago.

RGM maintained its forecast of 4.0 per cent growth rate for Malaysia retail industry in 2016.

It added that the 3 per cent cut in employees’ EPF contribution from March 2016 was not expected to contribute significantly to overall retail sales in 2016.