Auto industry on path to recovery bookings


PETALING JAYA: Selected automotive players are already seeing strong pick-up in bookings, an indication that the industry is on the path to recovery.

MIDF Research said Bermaz Auto (BAuto) saw almost a tripling in daily bookings compared to post-movement control order (MCO) levels, while UMW is seeing early signs of improvement in booking levels.

“Our channel checks with selective industry players suggested possible early signs of improvement in sales. BAuto (which sells Mazda cars), for example, saw a strong rebound in daily bookings post the automotive tax-holiday announcement on Friday last week," MIDF Research said in a note.

“To give a feeler, pre-pandemic daily bookings stood at 30 to 40 per day (in line with 900 to 1,200 monthly sales), while post-MCO daily bookings declined to 20 to 25 per day.”

However, it said daily bookings ballooned to around 60 per day in the earlier part of this week, implying an almost doubling in daily bookings against pre-pandemic levels and a tripling against the post-MCO daily bookings.

“The new price list for Mazda has yet to be officially released but we understand that the CX-5 and CX-8 CKDs will see a 3.4% to 3.9% price reduction (this is before taking into account dealer discounts).

“Our chat with UMW, meanwhile, suggests that UMW Toyota is also definitely seeing improvements in daily bookings, though detailed numbers are not forthcoming yet at this juncture.”

In the Short-term Economic Recovery Plan announced by Prime Minister Tan Sri Muhyiddin Yassin last week, locally-assembled cars will be fully exempted from sales tax while for imported cars, the sales tax will be cut from 10% to 5%, beginning next Monday to Dec 31.

Maybank Investment Bank Research (Maybank IB) said the introduction of the tax exemption is a timely inducement to spur sales decimated by the MCO exercise since March.

“We are positive on this, for it will spur purchases and reduce inventory build-up. Sales were severely curtailed during the MCO period. We draw parallel of this ‘tax incentive scenario’ to the situation back in June to August 2018, when the 6% goods and services tax was zero-rated.

“Mazda’s vehicle sales were the strongest during the three-month period then, with sales surging by 89%, 71% and 143% year-on-year to 1,500 units, 1,200 units and 1,900 units, respectively.”

MIDF Research, however, said it is difficult to ascertain if this strong sales trend is sustainable.

“Notwithstanding damaged consumer sentiment given the impact of lockdown measures to contain the pandemic, we re-iterate that the strong combination of tax-holiday induced demand and robust liquidity created for consumers from various stimulus measures.”

The research house added that a low interest rate environment are strong catalysts to drive a rebound in vehicle-buying sentiment.

“As we had highlighted in our recent sector upgrade, the three-month tax-holiday in 2018 lifted total industry volume during the period by 21,000 units per month, relative to our conservative assumption of 7,800 units per month increase from the tax-holiday in the second half of 2020.”