National marques set to drive sales

PETALING JAYA: UOB Kay Hian (UOBKH) Research is revising upward its forecast total industry volume (TIV) this year for the automotive sector by 4.5% to 700,000 units.

This was made on the back of a stronger-than-expected demand for national brands.

The research house said vehicles produced by Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Proton are expected to continue bolstering demand, particularly among budget-conscious mass market customers.

“We have incorporated an additional 30,000 units into our projection that will bolster our forecast for the remaining months in 2023, resulting in an estimated TIV of 128,233 units (42,744 units per month),” it said in a report.

The Malaysian Automotive Association said TIV decreased 6.4% month-on-month (m-o-m) in September but improved 5% year-on-year (y-o-y) to 68,156 units.

According to UOBKH Research, in September this year, Perodua led the automotive market by selling 28,995 units with a 40% market share, while Proton sold 12,006 units.

“The A and B car segments continued to demonstrate a favourable performance, driven by models such as Bezza, Myvi and Axia for Perodua and Iriz, Saga and Persona for Proton,” it said.

It noted that most brands experienced a decline in m-o-m sales due to customers’ wait-and-see approach for incentives to be unveiled in Budget 2024 but now expects it to pick up again.

However, electric vehicle (EV) sales surged over 100% y-o-y to 5,630 units compared with 2,631 units previously.

This was bolstered by the continuous introduction of new models and the government’s commitment to enhancing the EV ecosystem, suggesting potentials for further expansion.

The recently announced Budget 2024 is set to further enhance the sector and the sustainability ecosystem by introducing additional incentives.

These include an extension of income tax relief for EV charging expenses, tax deductions for EV rental costs and the introduction of Electric Motorcycle Adoption Incentive Scheme.

“The information we have gathered indicates that over 90% of EV car buyers are in the T20 group.

“We believe the numbers can be further supported by the ongoing government incentives and plans, ultimately benefiting the B40 and M40 groups,” UOBKH Research said.

Additionally, for the non-national carmakers, UMW Toyota Motor maintained its market leadership with 9,020 units sold, followed by Honda with 6,514 units sold.

“Meanwhile, Mazda recorded sales of 1,378 units in September 2023.

“This monthly performance suggested a slowdown in demand for non-national brands due to the same aforementioned reason, but still maintains strong figures on a y-o-y basis.”

Meanwhile, the research house said it is retaining its “market weight” on the sector and maintained its “neutral” view as there are no significant catalysts to boost industry volume currently.

“Thus, we expect sector revenue and earnings to decline 11% and 16% in the second half of 2023 (2H23), respectively,” it noted.

As for Bermaz Auto Bhd (BAuto), UOBKH Research said it expects the company’s revenue and earnings for the second quarter of 2024 to decline by 26% to 44% and by 57% to 60% quarter-on-quarter (q-o-q), respectively.

“We anticipate a decrease in demand for BAuto’s key brand, Mazda, over the remaining three months of 2023.

“This is primarily due to the impact of price increases introduced for some models in April this year and the shift in customers’ interest to EV cars,” it said.

However, UOBKH Research said the outlook will remain stable, supported by progress in its completely-knocked-down line-up, a steady order book and an attractive dividend yield of 6.9%.

Another big player in the automotiveindustry, UMW Holdings Bhd, has also been forecast to experience a drop in revenue and earnings by between 26% and 28%, and between 33% and 36%, respectively, q-o-q.

“We expect a slowdown in new bookings for Toyota in 2H23 but anticipate a recovery in the equipment, machinery and equipment as well as aerospace segments that should offset the impact of lower vehicle sales,” it said.