PETALING JAYA: The lifting of the movement control order (MCO) in eight states coupled with easing of restrictions in economic activity have translated into a 30% improvement in the automotive sector’s total industry volume (TIV) in February from the previous month, analysts observed.
Furthermore, the growth momentum is expected to continue with the resumption of Road Transport Department services for all types of transactions, in line with Malaysian Automotive Association forecast.
CGS-CIMB Research said the stronger TIV reported in February 2021 was driven by robust demand in the sports utility vehicle (SUV) and passenger car segments, which recorded 98% and 19% month-on-month sales volume growth respectively.
With that in mind, it projected that this year’s TIV will still reach 580,000 units, representing a 10% increase year on year, on the back of higher sales at Proton (+20% on-year) and Perodua (+13%), driven by multiple new launches.
“We gather that demand for Proton X50 and X70 remains strong, with Proton’s management indicating during DRB-HICOM’s post 4Q’20 results briefing that these models have order backlogs of about 3-4 months,” the research house said in a report.
At the same time it also learnt that Perodua has received over 8,000 bookings for its recently launched Ativa SUV. “Overall, we believe these positive developments will help support TIV growth in 2Q21F and beyond.”
Overall, CGS-CIMB opined that the sector remains on track for earnings recovery this year and has projected a 40% net profit growth for the sector compared with a 26% decline reported for 2020F.
With that, it has retained a “neutral” rating on the Malaysian auto sector, with DRB-HICOM and UMW as its preferred picks.
Similarly, AmInvestment Bank Research (AmResearch) expects the strong sales momentum to continue throughout the first half of the year, bolstered by the extension of the sales and service tax (SST) exemption from Jan 1 until June 30, 2021.
“We believe that the SST exemption will continue to spur buying interest for passenger vehicles, especially the national brands Proton and Perodua,” it said.
The research house related that Perodua registered 16,600 units in February, a 2% decline month on month and 12% year on year and has a sales volume target of 240,000 units for the year.
It is optimistic about Perodua’s outlook in 2021, bolstered by the recent launch of the Ativa SUV.
“In our opinion, the Ativa is one of the best value-for-money cars domestically, brought about by a 95% localisation rate (the highest initial local content for any Perodua model),” said AmResearch.
“On the flipside, we understand that the production of Myvi, Aruz and Alza was affected by the shortage of semiconductor chips, which could have a temporary impact on its total sales deliveries for the models till March 2021.”
As for Proton, it delivered 11,700 units (+96% on-month, +17% on-year) in February, with the X50 and X70 chalking up sales of 3,300 units and 1,500 units respectively for the month.
It is understood that bookings for the carmaker’s X50 model has exceeded 50,000 units as at end-February, with 8,200 units already delivered to customers.
“We gathered from our channel checks that the waiting period for the Proton X50 is more than six months, an indication of how well-received the model is locally. As of now, the global chip shortage issues have not affected both SUVs.”
Proton’s market share soared to a seven-year high at 27.3% in February, resulting in a runner-up year-to-date market share of 23.3%, behind Perodua’s 44.3%. Proton has set its sales volume target for 2021 at 132,000 units.
With that, the research house has maintained its “overweight” stance on the sector with an unchanged TIV of 575,000 units for 2021.
“We believe that the SST exemption will continue to spur buying interests for passenger vehicles, especially the national brands Proton and Perodua.”
It noted that the approval rate for loans on passenger cars stood at 60.8% in January, an increase of 6% from December 2020, and was higher than the average of 54.8% in 2020.
Source: The Sun Daily
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