KUALA LUMPUR: Total vehicle sales for 2023 are unlikely to replicate the record-breaking performance of 2022, due to rising inflation, potential rate hikes and fulfilled orders in conjunction with the sales tax exemption by the end of March.
The momentum for last year’s total industry volume (TIV), which is forecast to surpass the 700,000 unit-mark for the first time, could start to wane from the second quarter of this year, said an analyst.
“Due to the sales tax exemption, which was introduced to mitigate the impact of the pandemic, many customers brought forward their purchases in 2022. Even those that probably didn’t need a new car, ended up buying one.
“As deliveries for orders placed during the tax holiday have to be fulfilled by the end of March this year, we expect TIV to start tapering off from April onwards,” he told StarBiz.
UOB Kay Hian Research, meanwhile, said it anticipates TIV in 2023 to be affected by a significant slowdown in consumption.
It said this will be due to the end of the sales tax exemption, rising inflation and rate hikes, which is anticipated to corrode consumers’ purchasing power.
“Furthermore, we expect the sales volume to be front-end loaded, as most automakers will rush their deliveries to meet the March 31, 2023 registration deadline to qualify for the sales tax exemption.
“Consequently, we expect TIV in 2023 to register a year-on-year drop of 20% to 550,000 units.”
According to the Malaysian Automotive Association (MAA), November 2022’s TIV came in at 64,404 units, bringing the year-to-date TIV to 642,306 units.
In a statement last month, the MAA said sales for December are expected to be higher than November’s, spurred by year-end promotions and as car companies rush to fulfil outstanding bookings.
An analyst pointed out that the MAA had “all but confirmed” that 2022 would be a record-breaking year for Malaysian car sales.
“The MAA expects December’s sales to surpass that of November’s. This would mean sales for December are anticipated to hit 64,404 units or more, resulting in TIV of at least 706,000 units for 2022, making it a new all-time high.
“This would beat the record-performing TIV performance of 666,674 units that was achieved in 2015.”
With the rush to fulfil outstanding bookings, another analyst said TIV performance will likely remain strong in the first quarter of 2023.
“On a year-on-year basis, however, we project a low single-digit growth for TIV in the first quarter of 2023,” he said.
In the first three months of 2022, sales volume was higher by 7.8% at 159,752 units compared with 148,155 units in the same period last year.
Similarly, Hong Leong Investment Bank (HLIB) Research in a recent report said it expects 2023 TIV to start on a high note, adding however that sales could potentially slow down by the second quarter of 2023.
It said this would be due to declining new orders, as consumers would have already brought forward their purchases.
“Hence, original equipment manufacturers will have to leverage onto attractive new models and sales programmes in order to sustain sales.”
The research house pointed out, however, that there will be a number of new model launches this year to continue enticing car buyers.
“Attractive new launches include Proton’s Geely-based models; Perodua’s new sedan, Aruz and Axia facelift; Honda’s WR-V, CR-V and BR-V; and Toyota’s Vios and Yaris.
“Subsequently, TIV will likely recover towards the end of 2023, due to normalising demand and more aggressive year-end sales.”
HLIB Research is projecting TIV to drop 10% year-on-year to 630,000 units.
Kenanga Research, meanwhile, believes vehicle sales will remain robust in 2023.
It said TIV will be supported by the reopening of the economy, financial assistance to the low-income group and subsidies on fuels, electricity and selected food items to keep the cost of living in check, as well as the relatively stable job market.
The research house is projecting a TIV of 690,000 units for 2023.
The MAA will announce last year’s TIV figures later this month. At its biannual meeting in July last year, the MAA forecast new vehicle sales to grow 5% to 630,000 units for 2022.
