• In January 2024, Total Industry Volume (TIV) declined by 16% MoM to 65,499 units mainly driven by non-national car which fell by 34% MoM to 23,042 units.

• Conversely, sales of national cars remained largely robust, only inching down by 2% MoM to 42,457 units, underpinned by strong backlog orders for Perodua, which stood at 128k units.

• Overall, TIV remains elevated at this juncture, with a 30.6% increase YoY compared to 50,168 units in Jan23. We expect higher cost of living to have a negative impact on TIV numbers, particularly in 2H24.

• Maintain Neutral on Automotive sector as we expect TIV to normalise to 650k units in 2024 (-19% YoY). Currently we have a BUY call on BAuto (TP: RM2.80) and HOLD call for MBMR (TP: RM4.28).

TIV declined 16% MoM. The TIV for January 2024 declined 16.5% MoM to 65,499 units against 78,398 units in December 2023. The decline is driven mainly by the drop in nonnational car which fell by 34% MoM to 23,042 units (Dec23: 35,809 units). Besides that, commercial vehicle sales also declined by 18.5% MoM to 6,105 units (Dec23: 7,490 units). The contraction is mainly attributed by the slowdown following the aggressive year-end sales in December 2023. Nevertheless, TIV in Jan24 is still higher than Jan23 TIV of 50,168 units, marking an increase of 30.6% YoY.

National car sales. In the national car segment, sales remain largely robust at 42,457 units, up 28.6% YoY (Jan23: 33,005 units) but down 2% MoM (Dec23: 43,309 unit). This translates to a dominant market share of 64.8%. Perodua played a pivotal role in contributing to this growth trajectory, demonstrating a remarkable increase of 38.1% YoY to 29,682 units, up from 21,499 units. However, there was a decrease of 4.9% MoM from 31,210 units in Dec23. Perodua continues to maintain a substantial market share of 45.3%. Despite the safety issues with Daihatsu in Japan, it appeared to have no impact on Perodua sales in Malaysia yet, as the company still has a backlog of orders totaling 128k units. Among the preferred models were Alza, Bezza, Myvi and Axia. Conversely, Proton’s sales grew by 6.6% MoM and 11% YoY to 12,775 units (Jan23: 11,506 units; Dec23: 12,099 units), securing a commendable market share of 19.5%. This growth was chiefly fuelled by robust demand for new models such as X50 (2,002 units) and S70 sedan (1,442 units), as well as existing models like Saga and Persona.

Non-national marques. The non-national segment, sales surged by 34.3% YoY, achieving total sales of 23,042 units (Jan23: 17,163 units). However, there was a notable decline of 34.3% MoM (Dec23: 35,089 units). Despite this monthly decrease, the segment maintained a substantial market share of 35.2%, including commercial vehicle accounting for 6,105 units. Mazda experience a decrease of 11% MoM but rose by 8% YoY to 1,308 unit in January 2024 (Jan23: 1,216 units; Dec23: 1,465 units). As of January, Mazda has a backlog order of around 2k. The launch of their new CX-5 facelift at the end of January was highly successful, as evidenced by pre-launch bookings. In contrast, Toyota experience decrease of 39% MoM and 9% YoY with sales totaling 6,276 units in January 2024 (Jan23: 6,771 units; Dec23:10,089 unit). Currently they have a backlog of orders totaling of 28k.

Hybrid & Electric Vehicle. In light of the burgeoning electric vehicle (EV) landscape, a recent entrant in the insurance market has set its sights on this burgeoning sector, offering tailored coverage. Allianz Malaysia has introduced the Allianz EV Shield plan. This comprehensive plan is exclusively crafted for EVs, providing coverage for on-the-go charging and mitigating risks inherent in EV charging, such as fire or theft damages. Additionally, it extends compassionate coverage to address expenses arising from public charging mishaps, with notable provisions for third-party injuries and property damage. Moreover, Allianz EV Shield offers on-the-spot vehicle charging assistance, alleviating the inconvenience for EV owners facing battery-related challenges and addressing the phenomenon of "charging anxiety" during long journeys. Recently, there has been a launch of new models such as the BYD Seal and Tesla Model 3, with several more in the pipeline set to be launched in 2024. However, we believe that consumers are eagerly awaiting the debut of locally-manufactured national EVs (Perodua and Proton), tentatively scheduled for launch in year 2025. As of the latest available data, there has been no recent update on charging point infrastructure. As of January, there were only 2,020 charging points (1,591 AC and 429 DC). Nevertheless, the government aims to establish 10,000 EV (9,000 AC: 1,000 DC) charging stations by 2025. To meet this target, Malaysia must install approximately (353 AC: 28 DC) charging points monthly to achieve its goal by 2025.

Maintain NEUTRAL. Our NEUTRAL recommendation for the sector remains unchanged, primarily due to the anticipated normalization of TIV in 2024. We uphold our TIV forecast for 2024 to 650k units which implies a decline of 19% YoY. This projection is primarily influenced by i) a reduction in consumer confidence attributed to the rise in Sale and Service Tax (SST) to 8%, ii) the imminent introduction of a luxury tax ranging from 5% to 10%, and iii) expected subsidy rationalisation in petrol prices which is estimated in 2H24. However, we maintain a BUY call on BAuto (TP: RM2.80) supported by strong customer demand. We also have a HOLD call for MBMR (TP: RM4.28) due to a healthy dividend yield. The upside risk to our sector recommendation is strong labor participation rate (70.2% as Dec23), which has potential to sustain the buying interest in car ownership.

Source: BIMB Securities Research - 4 Mar 2024