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The stimulus package as a whole is designed <strong>to</strong> enhance domestic growth and improve<br />
market confidence. This package ensures that a larger segment of the population will realize<br />
the benefit of productive expenditure from the government.<br />
An <strong>article</strong> in the Business Times published on March 11, 2009 carrying the title<br />
“‟Unprecedented move' <strong>to</strong> avert recession” reported that on March 10 2009, Najib announced<br />
another stimulus package, only this time with a much larger quantum. The second stimulus<br />
package dubbed the mini budget <strong>to</strong>talled RM60 billion. Najib said that the large stimulus<br />
package was "unprecedented in the nation's economic his<strong>to</strong>ry" and necessary given the<br />
worsening global economy. Following the unveiling of the first stimulus package in November<br />
2008, Najib said that “…without these efforts, the economy faces the prospect of a deep<br />
recession”. The second stimulus package has four major thrusts which are <strong>to</strong> reduce<br />
unemployment and increase employment opportunities; ease the burden on the rakyat; help<br />
the private sec<strong>to</strong>r; and build capacity. Najib also announced the au<strong>to</strong>motive scrapping policy<br />
where a cus<strong>to</strong>mer wishing <strong>to</strong> buy a Pro<strong>to</strong>n or a Perodua may opt <strong>to</strong> scrap their old cars (10<br />
years or older) and receive a rebate of RM5,000 for it.<br />
Global Au<strong>to</strong>motive Industry Scenario<br />
The global au<strong>to</strong>motive industry has never seen a worse condition than the one it is currently<br />
in <strong>to</strong>day. Currently, the primary news headlines in the au<strong>to</strong>motive industry has been about<br />
shrinking demands; planned plant shutdowns, plant closures, and job cuts. Among the <strong>to</strong>p<br />
news so far has been the announcement that Toyota has forecast lower profits for 2010 by<br />
more than 80%. This is primarily attributed <strong>to</strong> the rising Yen and the weak global car sales. In<br />
Europe, BMW had announced that it had posted a fourth-quarter loss before interest and<br />
taxes of 718 million Euros or a 78% decline, primarily attributed <strong>to</strong> weaker car markets, “risk<br />
provisions” and personnel costs.<br />
RESEARCH PROBLEM<br />
The situation in Malaysia, though not as bad, is still relatively poor. When the economy slows<br />
down, consumer spending also reduces drastically, more so on the big ticket items such as<br />
the purchase of property, leisure holidays and cars. Due <strong>to</strong> this correlation, it would be safe <strong>to</strong><br />
say that the au<strong>to</strong>motive industry is one of a few key indica<strong>to</strong>rs <strong>to</strong> predict the economic health<br />
of a country. The number of new vehicles registered is one of the lagging indica<strong>to</strong>rs<br />
prescribed by the Malaysian Department of Statistics. 1<br />
On this note, it was a clear signal that the Malaysian economy was on a slight decline when<br />
the Malaysian Au<strong>to</strong>motive Association (MAA) announced that the Total Industry Volume (TIV)<br />
for 2009 would contract by approximately 12.2%. Passenger car TIV (new registered<br />
vehicles) in 2008 was 497,459 units, but in 2009, the figure is only 436,800 units. This was<br />
compounded when the car sales for the month of January 2009 was significantly lower as<br />
compared <strong>to</strong> the corresponding period the year before. Total passenger car sales for January<br />
2008 was 36,396 units while it was only 30,189 units in January 2009, corresponding <strong>to</strong> a<br />
17% drop in sales.<br />
1 Lagging indica<strong>to</strong>rs tell us what had happened <strong>to</strong> the economy. It measures the performance of cyclical<br />
movements of the leading and coincidental indices – “Malaysia Economic Indica<strong>to</strong>rs – Leading,<br />
Coincident and Lagging Indices”; Department of Statistics, Malaysia; December 2008<br />
UNITAR E-JOURNAL Vol. 6, No. 2, June 2010 80