Bimb Research Highlights

Economic - Automotive: “Perodua Sales Dipped but National Car Remain Strong”

Publish date: Mon, 01 Apr 2024, 04:51 PM
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Bimb Research Highlights
  • Total Industry Volume (TIV) for February 2024 decreased by 4% MoM to 62,833 units primarily due to an 8% MoM decline in Perodua car sales to 27,315 units. However, national car sales only decreased by 4.4% MoM to 40,571 units. This resilience is supported by a stronger sale by Proton which was driven by the launch of its new model, the S70 sedan.
  • Overall, YTD24 for TIV remains elevated at 128,332 units, exhibiting a 12.8% YoY increase as compared to 113,729 units in YTD23. We anticipate that the higher cost of living will exert a negative impact on TIV numbers, especially in 2H24.
  • Maintain Neutral on Automotive sector as we expect TIV to normalise in 2024 with our forecast projecting it to reach 650k units. We have a BUY call on BAuto (TP: RM2.80) and HOLD call for MBMR (TP: RM4.28).

TIV declined 4% MoM. In Feb24, the TIV saw a 4.1% MoM decline to 62,838 units as compared to 65,499 units in Jan24. The decline was primarily attributed to an 8% MoM decrease in Perodua car sales. Consequently, national car sales also declined by 4.4% MoM to 40,571 unit sold in Feb24 as compared to 42,457 unit in Jan24. On YoY basis, TIV edged down by 1.1% mainly dragged by lower commercial vehicle sales which fell by 31.9% to 4,854 units (Feb23: 7,128 units). This had more than offset the increase in passenger vehicle sales that grew by 2.7% to 57,979 units (Feb23: 56,433 units). Nevertheless, YTD24 TIV of 128,332 units is still higher than YTD23 TIV of 113,729 units, marking an increase of 12.8% YoY. This was mainly due to strong growth in Jan24.

National car sales. In the national car segment, sales maintained within the 40k range at 40,571 units, marking a 4.4% YoY increase (Feb23: 38,843 units) but 4.4% MoM decrease (Jan24: 42,457 units). This maintains a dominant market share of 64.6%. Perodua notably contributed to this growth trend, showcasing an impressive 9.5% YoY increase to 27,315 units, compared to 24,936 units previously, securing a market share of 43.5%. However, to recap, there was an 8% MoM decrease from 29,682 units in Jan24. As of Jan24, Perodua still has a backlog of orders totaling 128k units, with favored models including Alza, Axia, Bezza, Myvi, and Ativa. Perodua continues to resonate with consumers, and anticipation is building with the launch of a new model scheduled for the middle of this year. Conversely, Proton’s sales growth offset the decrease for Perodua by 3.8% MoM but down by -4.7% YoY to 13,256 units (Jan24: 12,775 units; Feb23: 13,907 units), securing a commendable market share of 21.1% (previously 19.5%). This increase was mainly driven by strong demand for new models like S70 sedan (2,314 units), along with existing models such as Saga (6,212 units), Persona (1,859 units) and X90 (374 units).

Non-national marques. The non-national segment sales declined by 10% YoY and 3% MoM to 22,262 units (Feb23: 24,718 units; Jan24: 23,042 units). This was dragged mainly by weaker commercial vehicle which fell by 31.9% YoY and 20.5% MoM. However, sales of non-national passenger vehicles remain robust. Mazda sales grew by 32% MoM and 21% YoY to 1,722 unit in Feb24 (Jan24: 1,308 units; Feb23: 1,426 units). Meanwhile, Toyota sales grew 17% MoM but declined by 20% YoY to 7,347 units in Feb24 (Jan24: 6,276 unit; Feb23: 9,233 units). In terms of backlog orders, BAuto’s Mazda and KIA stood at 2,000 units and 200 units respectively whereas Toyota have a backlog of orders of 28,000 units.

Hybrid & Electric Vehicle (EV). Bermaz Auto’s recent acquisition of distribution rights for Xpeng Motor, a Chinese EV brand, mark a significant milestone in Malaysia’s budding EV market. This development introduces a new player and highlights the country’s growing interest in EV. Nonetheless, we think substantial EV adoption in Malaysia may only occur in 2026. This is to be driven by the forthcoming entry of local EVs which will offer a competitive pricing to the mass market. Note that national car manufacturers are expected to launch its EV models in 2025.

However, we think government support remains crucial at this stage. With the anticipated arrival of national EVs in 2025, prolonging road tax waivers beyond December 2025 would expedite EV adoption, in our view. Besides that, extending incentives like excise duty and sales tax exemptions for locally-assembled EV components, which lapsed in December 2027, would greatly benefit national EV manufacturers.

Additionally, providing subsidies or tax breaks to support the installation of residential charging infrastructure, which ended on December 31, 2027, for home charging port installations, would further accelerate the adoption of EVs. Malaysia currently has 2,020 charging points, with a target of reaching 10,000 by 2025. Achieving this goal necessitates the installation of approximately 371 AC and 29 DC charging points monthly.

Maintain NEUTRAL. Our NEUTRAL recommendation for the sector remains unchanged, primarily due to the anticipated normalization of TIV in 2024, with a forecasted TIV of 650k, implying a 19% YoY decline. We remain cautious on the automotive sector due to potential challenges ahead, including i) a reduction in consumer confidence stemming from the rise in Sale and Service Tax (SST) to 8%, ii) the impending introduction of a luxury tax ranging from 5% to 10%, and iii) expected rationalization of subsidies in petrol prices estimated in 2H24. However, there is an upside risk to our sector recommendation due to the strong labor participation rate, which has the potential to sustain buying interest in car ownership. Consequently, 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.

Source: BIMB Securities Research - 1 Apr 2024

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