PETALING JAYA: Sustained demand and high volume of backlog orders will remain as the growth drivers for the automotive sector this year, says CGS-CIMB Research.
The research house said total industry volume (TIV) in September 2022 grew marginally by 0.1% month-on-month (m-o-m) to 67,659 units.
This was mainly attributed to stronger sales from the commercial vehicle segment that rose by 11% m-o-m.
“Meanwhile, passenger vehicle sales fell 1.1% m-o-m due to lower sales from passenger cars and sport-utility vehicles, which fell by 1.6% and 5.1% m-o-m, respectively.
“The Malaysian Automotive Association (MAA) attributed the sustained TIV delivery to healthy orders for bookings received prior to June 30, 2022,” said CGS-CIMB Research in a report on Thursday.
On the back of order backlog fulfillment by car companies in the months ahead, the research house said MAA expects flattish m-o-m sales to continue in October 2022.
“Proton sales jumped by 28% quarter-on-quarter (q-o-q) on the back of a production volume recovery for popular models, such as Proton X50 and Saga, which had been earlier impacted by floods and severe parts shortages since the first half of 2022,” said CGS-CIMB Research.
On the other hand, TIV for the nine months of 2022 surged 62% y-o-y to 516,798 units, propelled by higher sales in the non-national segment.
The segment saw a 73% y-o-y sales growth, with Japanese marques in the lead, while local marques Perodua and Proton contributed 55% y-o-y to TIV growth during the nine-month period.
Overall, the research house said the market share for national brands declined by 2.7 percentage points y-o-y to 57% year-to-date (YTD) September.
“We also attribute the higher YTD September TIV sales to base effects (negative impact of the Covid-19 lockdowns from June to August 2021 on sales); and extension of the grace period until March 31, 2023 for bookings made up to June 30, 2022 in order to enjoy the sales tax holiday.”
While CGS-CIMB Research upgraded its forecast for TIV this year by 4.7% to 667,000 units, at the same time it also projects a potential y-o-y drop in TIV beyond 2022.
It said consumer sentiment is expected to be gloomy in 2023 with rising interest rates and potential rationalisation in the fuel subsidy programme.
“We expect the automotive sector to register positive y-o-y and q-o-q revenue growth in 3Q22, driven by higher TIV delivery.”
However, it said the sector’s earnings performance could be offset by higher operating costs, given the unfavourable foreign exchange rate movement and inflationary cost pressures from rising raw materials and labour costs.
“Another downside is the weakening ringgit against the US dollar, which fell by 3% q-o-q and 6.8% y-o-y,” it said.
