The first
problems Tan Chong Motor Holding Berhad (TCMHB) faced is suffering a loss of
RM59,000,000.00 according to annual report 2016 after more than a decade of
profitability. In addition, at the first quarter of 2017, the market still low
demanding on new vehicle and caused TCMHB struggle financially. TCMHB expects
domestic automotive sector continues challenging since the financing approval
guidelines is strict and consumer demand is low in the current economic
environment (Hafidz, 2017).

Besides, the
revenue declined in view of overall little consumer demand. In consequence, the
earnings before interest, tax, depreciation and amortization drop. For the
division of insurance and hire purchase business, the sales fall down result
from poorer number of motor insurance policies compared to previous year (Tan
Chong Motor Posts RM37m net loss in Q1, 2016). Moreover, the consumers’
confidence remains low toward domestic automotive sector and the volatility of
the global and domestic economic situation. It is highly important for TCMHB
remain disciplined and focused on key priorities going forward (Wong, 2017).

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Furthermore, management
of TCMHB forecasts a challenging outlook for the domestic auto sector. The
reasons are because softer consumer demand and stricter financing approval for
hire purchase loan from banks. Another causes of revenue declined is lack of
new Nissan model launches during the year. However, no new model planned to be
launched until 2018. New model seemed difficult to stimulate sales. In fact,
domestic auto sector market remains challenging since weak consumer sentiment
and tighter financing approvals (Tan Chong Motor below Expectation, 2017).

In short, TCMHB
is assuming to face another weak quarter in current situation. As TCMHB remain
not bringing any new models in to the market, the sales is remain poor and the
problems is bringing to the rest of the year. Weak consumer sentiment and
stringent hire purchase approvals lead to car sales assumption reduce significantly
(Farah, 2017).