Friday, January 29, 2021

Analysts stick to their auto TIV projections for 2021

PETALING JAYA: The Malaysian auto sector’s strong sales volume momentum is expected to be sustained in the first half of the year, bolstered by the sales and service tax (SST) exemption extension from Jan 1, 2021 to June 30, 2021, according to analysts.

AmResearch reiterated its “overweight” call on the sector with an unchanged total industry volume (TIV) projection of 600,000 units for 2021.

“We believe that the SST exemption will continue to spur consumers’ buying interest on passenger vehicles, especially the national brands Proton and Perodua,” it said in a report.

The research house highlighted that December 2020 registered a 60-month high TIV of 68,800 units, a 19% month-on-month (m-o-m) increase and a 26% year-on-year (y-o-y) increase, driven by the SST exemption extension from the Penjana stimulus package and new key volume-driven model launches.

Overall, TIV for 2020 stood at 529,300 units, underpinned by strong sales in December which were attributed to a rush in purchases ahead of an expected end to the tax exemption on Dec 31, 2020.

In December, Perodua chalked up sales of 25,200 units, a 37% y-o-y increase which brought the carmaker’s total sales for the year to 220,200 units, translating into an 8% y-o-y decrease but ahead of its full-year target of 210,000 units.

“We continue to be optimistic on Perodua’s outlook in 2021 with the imminent debut of the Perodua D55L A-segment SUV, which we expect to be launched in 1Q’21,” said AmResearch.

Proton delivered 12,800 units in the final month of last year, a 15% y-o-y increase with the X50 and the X70 making up a combined 3,400 units for the month.

Its total sales rose 8% y-o-y to 108,500 units, making it the only major carmaker to record growth throughout the year.

The research house said Proton’s market share stood at 19% in December, resulting in a runner-up year-to-date market share of 20.5%, behind Perodua’s 41.6%.

For 2021, Proton has introduced a sales volume target of 132,000 units.

Similarly, Fitch Solutions has maintained its forecast of a 6.9% increase in total new vehicle sales in Malaysia in 2021, despite the reintroduction of the movement control order (MCO 2.0) on Jan 13 due to rising Covid-19 cases.

“We maintain our forecast of a 6.9% increase in total vehicle sales in 2021, on the back of our 2020 estimate of a 15% decline, which would result in 2021 sales remaining below their 2019 pre-pandemic levels, reaching just under 550,000 units,” said Fitch Ratings’ research unit.

It added that sales will take a hit during MCO 2.0 but will improve as movement restrictions ease.

“We also expect the vaccine rollout set to begin in February 2021 to support our view as sentiment levels improve from consumers and businesses leading to a resumption in vehicle purchases.”

Fitch Solutions noted that the SST exemption extension supports its forecast.

It pointed out when the sales tax exemption was introduced in June 2018, vehicle sales increased by 50.1% on a month-on-month basis, further highlighting the importance this measure has had in stimulating demand for vehicles in the past.

“We therefore expect sales to follow a similar path in 2021 as that observed in the months after the gradual easing of restrictions in May 2020.”

In addition, the Customs Department’s delay in the introduction of excise duties on completely built-up and completely knocked down vehicles will create a conducive environment for vehicle sales growth in 2021 when movement restrictions are eased as the increase in excise duties would have raised prices for vehicles.

Proton delivered 12,800 units in the final month of last year, with the X50 and the X70 making up a combined 3,400 units for the month.



Source: The Sun Daily

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