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Rock Street, San Francisco

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 poor
demanding on new vehicle and caused TCMHB struggle financially. When the
financial approval is stringent, it is more difficult for buyer to apply loan. On
the other hand, purchaser demand for automotive sector is low in current
economic environment. Hence, TCMHB expects domestic automotive sector continues
challenging (Hafidz, 2017).

Besides, the
revenue declined in result from overall little consumer demand. At the same
time, the earnings before interest, tax, depreciation and amortization decline.
The sales of division of insurance and hire purchase business is drop when
compared to previous year, result from poorer number of motor insurance
policies (Tan Chong Motor Posts RM37m net loss in Q1, 2016). Moreover, the confidence
of purchasers remains low toward domestic automotive sector and the volatility
of the global and domestic economic situation. TCMHB is required continue 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).

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