• In Sept 2024, Total Industry Volume (TIV) fell by 18.5% MoM and 14.9% YoY to 58,032 units, primarily due to lower national car sales. However, YTD24 numbers remain elevated at 594,037 units which was 3.9% higher than 571,957 units recorded during the same period last year.

• The low TIV was attributed to planned OEM shutdowns for maintenance and model transitions, fewer working days due to public holidays, and consumer anticipation of potential incentives in Budget 2025.

• The impending civil servant salary increment is expected to enhance consumer spending and boost auto sales, while the introduction of a targeted RON95 subsidy by mid-2025 presents upside risk as it is likely to shift consumer demand toward fuel-efficient and electric vehicles (EVs).

• We maintain our OVERWEIGHT recommendation for the automotive sector. We have a BUY call on BAuto (TP: RM2.80) and SIME (TP: RM3.00) while a HOLD call for MBMR (TP: RM5.50).

TIV drop by 18.5% MoM. In Sept 2024, TIV experienced a significant decline of 18.5% MoM to 58,032 units (Aug 2024: 71,162 units). This was driven by a 26.6% MoM reduction in the national car segment, particularly impacted by Perodua's sales. Meanwhile, non-national passenger car sales inched lower by 2% MoM to 23,501 units (Aug 2024: 24,085 units). The low TIV was attributed to planned OEM shutdowns for maintenance and model transitions, fewer working days due to public holidays, and consumer anticipation of potential incentives in Budget 2025. On a YoY basis, TIV was down 14.9% as compared to 68,174 units in Sept 2023. However, TIV for 9M24 rose by 3.9% YoY, reaching 594,037 units (9M23: 571,957 units).

National car sales. Sales dropped significantly by 26.6% MoM to 34,531 units (Aug 2024: 47,077 units), driven primarily by lower Perodua sales, which declined by 31.8% MoM to 23,695 units. However, the backlog orders remains healthy at 100k units. Meanwhile, Proton sales declined by 12.3% MoM due to lower demand for the Saga, Persona, and Iriz, partially offset by strong demand for the X70. Overall, the segment maintains a dominant market share of 62%, with Perodua contributing 43% and Proton 19%.

Non-national marques. The non-national segment saw a 2% MoM decline in sales to 23,501 units (Aug 2024: 24,085 units), accounting for 38% of market share. Chery outperformed with a 35.6% MoM increase, driven by strong sales of the Jaecoo J7, Omoda 5, and T11. Notably, Jaecoo, a subsidiary of Chery that was launched in July 2024, managed to achieve 1,394 units in September, compared to 810 units in August 2024 and just 5 units in July 2024. In contrast, other brands experienced lower sales. Honda sales plunged by 20.5% MoM to 5,876 units while Toyota fell 8.6% MoM to 7,637 units.Meanwhile, Mazda declined by 14.1% MoM to 902 units.

Hybrid & Electric Vehicle (EV). According to the Road Transport Department Malaysia (JPJ), as of 9M2024, 15,834 EV units were registered in Malaysia. In Sept 2024, EV registrations declined 15% MoM to 1,513 units (Aug 2024: 1,774 units). This was driven by lower BYD sales which recorded 361 units, a 32% MoM drop from 533 units in Aug2024. Meanwhile, Tesla, and BMW showed growth;Tesla sales inched up by 3% MoM to 450 units (August 2024: 438 units) while BMW surged 17% MoM to 202 units from 172 units in the previous month. Despite this momentum, EVs still account for only 2.5% of total vehicle registrations at JPJ (Sept 2024: 625,000 units), significantly below the government's target of 20% by 2030.

On the infrastructure front, as of 1st Oct 2024, Malaysia had 3,171 public charging points (2,358 AC units and 813 DC units). To meet the national target of 10,000 charging stations by 2025, an average of 439 AC and 49 DC charging points must be installed monthly.

Maintain OVERWEIGHT. We reaffirm our OVERWEIGHT recommendation for the automotive sector, driven by the impending civil servant salary increment, which is poised to enhance consumer spending and boost auto sales. Additionally, the upcoming introduction of a targeted RON95 subsidy by mid-2025 provides upside risk to our forecast as it is expected to shift consumer demand toward fuel-efficient and EVs. This policy, which will remove subsidies for foreigners and the top 15% of high-income earners, is likely to drive behavioural changes, particularly among the T15 segment, who may transition to EVs to offset rising fuel costs. Meanwhile, the M40 and lower-income groups will continue to benefit from fuel subsidies, covering 85% of the population.At this juncture, we maintain a BUY call on BAuto (TP: RM2.80) and SIME Darby (TP: RM3.00), and HOLD for MBMR (TP: RM5.50).

Source: BIMB Securities Research - 22 Oct 2024