RHB Research projects TIV of 730,000 units for next year, an 8% year-on-year decline from the 790,000 units projected for this year.
PETALING JAYA: The automotive market is projected by RHB Research to experience sluggish growth in 2025 due to a lack of catalysts supporting sales growth and a high-base effect from this year, following the recent release of the November total industry volume (TIV) figure by the Malaysian Automotive Association showing a decline in sales for the month.
The research house has maintained a “neutral” weighting for automotive stocks and projects TIV of 730,000 units for next year, an 8% year-on-year decline from the 790,000 units projected for this year.
As of November, TIV stood at 731,000 units.
It noted that a combination of ongoing price competition between non-national marques as well as lower demand from shrinking order backlogs as reasons for toning down expectations for next year.
“We are anticipating a softer TIV as the high-base effect kicks in, and do not see any compelling factors for 2025 auto sales to be maintained at the current elevated levels.
“We think the decline will mainly be contributed by the non-national marques, which continue to face intensifying competition as a result of new names that have entered the fray, that is, mainly China carmakers,” RHB Research added.
The research house said buyers may postpone their purchases in anticipation of further price cuts from both existing and new non-national marques, which would also destabilise the non-national segment.
“Our top picks are still Bermaz Auto Bhd
for its attractive valuation and higher-than-sector-average dividend yield and Sime Darby Bhd for being well-positioned for the rationalisation for RON95 fuel, with its broad EV line-up.
“Sime Darby’s stake in Perusahaan Otomobil Kedua Sdn Bhd (Perodua) also helps to insulate it against earnings risks amid intensifying competition between the non-national marques,” the research house said.
It remained cautious about the outlook for the automotive market despite domestic automotive distributors having generally met performance expectations in the third quarter (3Q) results season, with Sime Darby and MBM Resources Bhd having met the research house’s expectations whereas Tan Chong Motor Holdings Bhd and Bermaz fell short.
“MBM’s net profit improved quarter-on-quarter, as expected, given higher Perodua sales volumes even though the carmaker had two planned factory maintenance shutdowns in 2Q,” it added.
Meanwhile, CIMB Research projects TIV to decline by 4% year-on-year to 755,000 units for next year as sales face headwinds from the potential removal of the RON95 petrol subsidy as well as the possible reversion of the open market value calculation method for locally assembled vehicles at the ex-factory stage, which would effectively increase excise duties.
The research house said it believes the removal of the RON95 subsidy would accelerate the adoption of electric vehicles (EVs) and anticipated higher sales for EVs amid rising competition ahead of the ending of import duty exemptions in 2026.
CIMB Securities has a “neutral” rating on automotive stocks, with Sime Darby remaining as its top pick owing to its earnings-accretive acquisition of UMW Holdings Bhd, growing exposure to Australia’s mining sector, and potential monetisation on non-core and land assets.
