Automotive sector expected to be stronger in 2H19

By BERNAMA | 19 July 2019

KUALA LUMPUR: Malaysia’s automotive sector is expected to be stronger in the second half of this year (2H19).

Maybank IB Research in its note today said the environment remained conducive as it expects stronger volume in the second half of the year.

"We expect average monthly sales of 52,300 units in the second half of 2019 (2H19) to meet our 2019 target of 610,000 units as in 1H19 it averaged 49,400 per month. Seasonal strength in the second half, alongside full half-year contribution from major launches from 1H19, are expected to contribute to a stronger 2H19," it said.

As for margins, higher advertisement and promotion expenses in 2H19 could be offset by the recent strength in the ringgit.

In 1H19, Proton saw the highest volume gain of 16,400 units year-on-year (YoY) in gaining 5.3 percentage points (ppts), while Honda recorded the largest volume drop of 7,100 units YoY, easing 2.8 ppts in market share during the same period.

In terms of production, Honda has scaled down substantially, dropping its volume to just 3,900 units in June 2019, a drop of 54 per cent month-on-month, which would signal a contraction in sales in the coming months due to stiff competition from both Proton as well as Toyota.

Affin Hwang Capital in its research note said the total industry sales volume (TIV) will moderate in the third quarter 2019, as consumers were seen taking attractive Hari Raya deals last month.

On a positive note, it said that there was unwavering support for the national car makers, with Proton standing out as the champion, leading to a bumpy road for foreign car brands in June.

"The six-month TIV of 296,300, up two per cent YoY, is within expectations and constituting 49 per cent of the 2019 forecast," it added.

Kenanga Investment Bank concurred with Affin Hwang’s sentiment that the sector would remain moderate due to pre-festive sales in May.

"Only Proton recorded positive YoY growth backed by its popular X70 and supported by the face-lifted Proton Iriz, Persona and Exora," it said.