Analysts welcomed TCMH’s announcement of new vehicle model launches in the coming months as they are expected to boost sales.
PETALING JAYA: The relentless onslaught of new Chinese electric vehicle (EV) and internal combustion engine (ICE) models launched in Malaysia will continue to weigh on the outlook of Nissan manufacturer and distributor Tan Chong Motor Holdings Bhd
(TCMH) despite the company rolling out new vehicle models in the coming months, while the company’s South-East Asian markets remain weak.
Analysts who attended TCMH’s second-quarter (2Q) results briefing recently were cautious over the company’s prospects after another quarter in the red, following a drop in revenue in the domestic and South East-Asian markets in which it has a presence, amid competition from new EV and ICE models from China.
Including 2Q, TCMH has endured seven straight quarters of losses.
While analysts welcomed TCMH’s announcement of new vehicle model launches in the coming months as these are expected to boost sales, weak consumer sentiment remains a challenge for the company.
“While we welcome the launch of new models to keep up with more dynamic peers, they will have to compete with a flood of rivals’ new models, especially Chinese EVs with low entry-level price points,” Kenanga Research pointed out.
The research house said TCMH’s Vietnamese operations would continue to be loss-making due to the Da Nang plant’s under-utilisation at 10% currently, although there were plans to boost utilisation to between 20% and 30%.
The plant has started producing the TQ-Wuling Light Truck N300P, with plans afoot to produce GAC vehicles by next year.
Other initiatives to support the Vietnamese market include making the best out of its exclusive rights to distribute King Long buses and GAC vehicles, where the GS8 sport utility vehicle and M8 multi-purpose vehicle (MPV) have been launched.
While there are expectations of an improvement in the second-half of 2024 with new Nissan hybrid models, GAC models launched in Vietnam and the stronger ringgit, Hong Leong Investment Bank Research said concerns remained on the company’s continued weak sales volume amid deteriorated market conditions.
The research house has maintained a “sell” call on its shares on the competitive domestic market and weaker Indochinese markets.
MIDF Research expects the domestic market to remain challenging from intense competition, with the appreciating ringgit offering some support.
It said the launch of a C-segment MPV model in October 2024 is expected to be a major volume driver, with local assembly by the fourth quarter of 2025 to be a catalyst for a turnaround in Vietnam. MIDF Research has maintained a “neutral” call on the stock.
