• In April 24, Total Industry Volume (TIV) declined by 18.4% MoM to 58k units due to weakness in all segments. However, it was dragged mainly by non-national car sales while national car sales maintain its dominant market share of 65%.

• On YoY basis, TIV rose by 21.3%. This led to an elevated YTD24 numbers at 260.3k units which was 8.2% higher than 240.4k units in Apr23. Nonetheless, we anticipate that the higher cost of living will exert a negative impact on TIV numbers, especially in 2H24.

• On a side note, the race for the introduction of national EV car is heating up between Proton and Perodua which will adopt different strategies ahead of the planned launches in 2025.

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

TIV declined 18.4% MoM. In Apr24, the TIV decreased by 18.4% MoM to 58k units (Mar24: 71k units) due to weakness in all segments. However, it was primarily attributed to lower non-national car sales that fell by 32% to 20.2k units (Mar24: 29.7k unit). National car sales slipped by 8.5% to 37.8k units (Mar24: 41.3k units) while commercial vehicle sales fell by 24.7% to 4.7k units (Mar24: 6.3k units). This was partially due to shorter working month due to Hari Raya festive season. However, on YoY basis, TIV rose by 21.3% that led YTD24 TIV to remain elevated at 260.3k units (YTD23: 240.4k unit).

National car sales. Sales have declined below 40k level for the first time since June 2023 (36,261 units). Nonetheless, it still maintain a dominant market share of 65.2%. Perodua’s sales declined by 6.7% MoM to 27k units supported by backlog order that remains at 100k units. Among the favoured models are the Alza, Axia, Bezza, Myvi, and Ativa. Meanwhile, Proton’s sales declined by 12.6% MoM mainly driven by the lack of sales for the Exora in Apr24 and decreased demand for the S70, followed by the Saga, Persona, Iriz, X70, and X90. However, there was increasing demand for the X50, which regained the top spot for B-segment SUVs.

Non-national marques. The non-national segment decreased by 32% MoM to 20.2k units compared to 29.7k units previously, representing a market share of 34.8%. Mazda experienced a decline of 19% MoM to 1.3k unit in April 2024. However, the backlog for BAuto as of April 2024 remained the same as of last month (i.e. Mazda 2k units and KIA 200 units). In contrast, Toyota experienced a decrease of 24% MoM to 7.2k units in April 2024 with backlog of orders totaling of 23k units.

Hybrid & Electric Vehicle (EV). Following the government’s aspiration for the national car to launch an EV in 2025, Proton has confirmed that it plans to launch its EV as early as 2025. Notably, this EV will be an entirely new model which is not a rebadged version from Geely or Proton. Initially, the cars will be assembled in China due to the availability of existing facilities before it will transition to local assembly (CKD) by 2027. Given that Proton will import the Completely Built Up (CBU) EV model from China, we think the pricing may not be competitive as Malaysian regulations stipulate that CBU EVs can only be imported if the price exceeds RM100,000. Consequently, this pricing strategy may hinder substantial EV adoption by 2026 due to the high cost. Of note, its new electric vehicle (EV) model is currently in the testing phase as the design and prototype stages have been completed.

Meanwhile, Perodua has also introduced its concept EV car, the EMO-1, which was unveiled recently during the Malaysia Automotive Show. It was completely built from scratch with assistance from local academicians and an Australian partner. Apparently, the company used the Myvi body as the prototype. However, the actual EV that will be produced will be significantly different from existing model. Production is expected to begin next year, with a price range between RM50k and RM100k. In addition, the company seeks to introduce a new mechanism to ensure better resale value in order to capture a segment of the market that is looking for more affordable EVs.

As of now, Malaysia has 2,288 charging points (AC: 1,785 units, DC: 503 units) and is targeting an expansion to 10,000 by 2025. This ambitious goal necessitates the installation of approximately 379 AC and 27 DC charging points monthly.

Maintain NEUTRAL. Our NEUTRAL recommendation for the sector remains unchanged, primarily due to the anticipated normalisation of TIV in 2024 to 650k units that implies a 19% YoY decline. This projection was underpinned by: 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 rationalisation 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 and increasing salaries for civil servants, which have the potential to sustain buying interest in car ownership. At this juncture, we maintain a BUY call on BAuto (TP of RM2.80) supported by strong customer demand. We also have a HOLD call for MBMR (TP of RM4.28) due to a healthy dividend yield.

Source: BIMB Securities Research - 27 May 2024