TA Research said declining backlog orders will likely result in weaker sales in 2024.
PETALING JAYA: Automotive companies will likely adopt more assertive pricing strategies for current as well as upcoming vehicles to protect their market shares as competition intensifies.
Despite launching new models, facelift versions and new variants, declining backlog orders will likely result in weaker sales in 2024, according to TA Research.
“We do not discount the possibility that some customers may postpone their purchases, anticipating the launch of the national brand electric vehicles (EVs) in 2025 and the expiration of the RM100,000 price cap on imported complete built-up EVs,” the research house said.
It has maintained its “neutral” recommendation for the sector, keeping its 2024 total industry volume (TIV) forecast at 700,000.
“We also like Bermaz Auto Bhd
due to its resilient car sales and attractive dividend yield. Key risks are reduction in purchasing power among Malaysian consumers and competition from China players,” the research house said.
It added that unfavourable new tax policy on imported vehicles and the fuel subsidy rationalisation policy, which is expected to affect the demand for mid-market vehicles, would be factors that drag consumer sentiment.
Similarly, RHB Research maintained its “neutral” call on the sector on the back of a weaker TIV performance, as normalisation of sales volumes takes place, likely in the second half of 2024 (2H24).
“Despite the strong year-to-date May TIV, we continue to anticipate 2024 having a meaningful decline in TIV, likely to be seen in 2H24, given the lack of catalysts to bring it to another high,” the research house said.
It said the auto sector performance missed expectations in the first quarter of 2024 (1Q24) results as Sime Darby Bhd and Tan Chong Motor Holdings Bhd fell short of expectations, while MBM Resources Bhd beat expectations.
“We foresee a seasonally weaker 2Q24 TIV quarter-on-quarter, due to the shorter working quarter given the Aidilfitri festive period, as well as other public holidays observed.
“Year-on-year (y-o-y), we believe 2Q24 will see stronger sales volumes due to the low base while Perodua, which makes up more than 40% of year-to-date TIV, registered outstanding growth in May at 20% year-on-year (y-o-y), bringing May TIV to an 8% increase y-o-y.”
Post 1Q24 results, RHB Research revised up its 2024 TIV forecast to 740,000 units from 625,000 units, mainly due to revision of Perodua’s 2024 forecast volumes on the back of stronger-than-expected sales.
