YTD May TIV up 8% YoY. On a year to date basis, the total industry volume (TIV) until May 2024 was 8% YoY higher at 328,901 units mainly due to stronger performances of national carmakers. It is largely in line with the Malaysian Automotive Association (MAA)’s full year 2024 TIV estimates of 740,000 units. 5M24 sales of passenger vehicles registered an 11% YoY increase to 301,109 units while commercial vehicles saw a YoY contraction of 15% to 27,792 units.
Implementation of diesel subsidy rationalisation. Effective from June 10, the price of diesel was raised to RM3.35 per litre, from RM2.15 previously under the implementation of the diesel subsidy rationalisation. While this may affect sales of diesel-powered vehicles, the overall sales impact on TIV is expected to be minimal as diesel vehicles accounted for less than 12% of the total sales, with the government also offering targeted subsidies to select sectors and recipients.
Battery Electric Vehicle (BEV). Sales volume has increased from 3,079 units in 2022 to 11,624 units in 2023, with the market share for BEV increasing significantly from 0.32% in 2022 to 1.45% in 2023. While BEV’s fast growth is likely to continue from a small base and encouraged by the government’s import duty and excise duty exemptions, more robust acceptance will only be possible if the price of EVs are lowered to a level comparable to Internal Combustion Engine (ICE) versions, and the related infrastructure such as charging stations are sufficient and widely available. Currently, there are around 1,430 EV charging points throughout Malaysia, lagging behind its regional peers, compared to Thailand and Singapore with 2,654 and 3,600 respectively. The government is targeting 10,000 charging stations by 2025 under the Low Carbon Mobility Blueprint (LCMB) 2021-2030.
TIV likely to dip in 2H 2024. While car sales remain strong, forward sales order are showing signs of easing, evidenced by shorter wait times and lower bookings. We remain cautious and expect TIV to normalise going into 2H 2024 given softer demand for discretionary items due to concerns over targeted subsidy rationalisation, high cost of living, the implementation of the proposed high value good tax and lack of catalysts for the auto sector. In addition, stiff competition from the influx of new model launches and competitive pricing in the market may pressure sector margins and curb earnings growth despite orders remaining robust.
We maintain our NEUTRAL call on the sector
Source: PublicInvest Research - 26 Jun 2024