PETALING JAYA: The Malaysian automotive industry is poised for a stronger recovery in 2022, backed by the steady vehicle sales momentum that has been picking up since the reopening of the economy.
Kenanga Research in a report yesterday said it was maintaining its 2021 total industry volume (TIV) target of 505,000 units and expects total vehicle sales to grow by 19% to 600,000 units in 2022.
With the reopening of economic activities, further driven by the sales tax exemption until the middle of next year, the research house said it expects buoyant recovery in car sales.
Kenanga Research said this would be spurred further by the growing number of backlogged bookings for popular models.
“We expect a stronger recovery next year with our TIV target at 600,000 units, which is closely in line with the Malaysian Automotive Association’s sales target of 605,000 units.”
It felt that 2022 TIV growth will be driven by the sales tax exemption and the expected recovery in the economy post-lockdown
Kenanga Research said the improved outlook should push demand for passenger vehicles, especially the affordable range of national marques.
“Nevertheless, for certain models, the recovery in car production could be limited by the ongoing global constraint in semiconductor chip supply,” it said.
The Covid-19 pandemic saw a surge in the demand for personal electronic items such as cell phones and laptops, which eventually led to a shortage of chips worldwide as production could not keep up with demand.
Some cars need more than 3,000 chips per vehicle. Even if one of the chips is unavailable, the production of that vehicle cannot be completed.
Meanwhile, the vehicle sales tax exemption was announced in June last year under the short-term economic recovery plan or Penjana.
Under the exemption, locally-assembled cars are fully exempted from the sales tax, while for imported cars, the sales tax has been reduced from 10% to 5%.
The tax holiday was initially supposed to last until the end of last year. However, it was extended to June 30, 2021; and then again until the end of the year.
In Budget 2022 in October, the government announced that the tax exemption would be extended once more until June 30, this year.
Meanwhile, the TIV for last month grew 2% year-on-year to 58,742 units.
Kenanga Research noted that automakers continued to ramp up car production, boosted by year-end promotional campaigns despite having to endure computer chip shortage issues.
“Automakers are currently diverting their chip supply towards popular models to meet backlogged demand, which stretches up to six months for certain models.
“Sales this month are expected to continue recording strong numbers on ramped-up production for companies with their financial year ending in December 2021.”
