Kenanga Research projects that TIV this year will soften to 710,000 units.
PETALING JAYA: New vehicle sales, or total industry volume (TIV), in Malaysia is expected to soften in 2024 amid a lack of catalysts.
This follows a strong finish for the country’s automotive industry last year, where TIV hit a record high of 799,731 units, up 11% year-on-year (y-o-y).
Kenanga Research projects that TIV this year will soften to 710,000 units, while RHB Research forecasts an even lower TIV of 625,000 units for 2024.
The projections were lower than the industry forecast of 740,000 units by the Malaysian Automotive Association.
Kenanga Research said in a report yesterday it expected the impending fuel-subsidy rationalisation to weigh on demand for mid-market models, but sales of affordable vehicles should remain good.
“We acknowledge that the impending fuel-subsidy rationalisation is likely to hurt the demand for mid-market models, while remaining optimistic on vehicle sales in the affordable segment as the buyers in the B40 group, which are the target market, will be spared the impact of subsidy rationalisation, and also could potentially benefit from the introduction of the progressive-wage model,” the research house said.
Kenanga Research maintained its “neutral” stance on the automotive sector.
Similarly, RHB Research was also “neutral” on the sector, saying it stayed cautious on the outlook for 2024, premised on a lack of catalysts to drive sales and earnings to a new high.
“Our softer TIV assumption, which is in line with the 10-year average, is based on a lack of compelling factors for 2024 auto sales to book another high. Furthermore, we believe the robust car sales in the last two years also reflect delayed purchases of big-ticket items from the pandemic years of 2020 and 2021, which was further boosted by the sales-tax holiday,” the brokerage explained.
“The launch of lower-priced models in the last two years such as the facelifted Perodua Myvi, the all-new Axia, and the 2022 Proton Saga also raised the demand for national cars,” it added.
RHB Research’s top sector pick was Bermaz Auto Bhd
, while Kenanga Research picked MBM Resources Bhd.
According to Kenanga Research, the industry’s earnings visibility would be backed by a booking backlog of 200,000 units, which should keep the industry busy for the next three to four months.
“More than half of the backlog is made up of new models, indicating how appealing new models are to car buyers. We expect a similar trend in 2024, given an equally strong line-up of new launches during the year,” it said.
“Meanwhile, excitement is building in the electric vehicle (EV) segment with the new launches of BYD Seal and Tesla Model 3 and the expected introduction of the first locally made national EVs (by Perodua and Proton) in 2025,” it added.
Kenanga Research noted a new car is still an affordable luxury for most Malaysian households despite high inflation and a slowing global economy.
The demand is also expected to be underpinned by strong consumer confidence supported by a stable domestic economy and a healthy job market, the affordability of motor vehicles thanks to the deferment of new excise duties, and potentially lower hire-purchase costs with the introduction of the reducing-balance method of calculating interest charges; and new models.
