TIV in Dec 2018 was reported flattish MoM at 48.2k units (-11.9% YoY; -0.2% MoM). For full year 2018, TIV managed to reach 598.7k units (+3.8% YoY), making up 99.4% of our full-year forecast of 602.6k units. The growth was due to strong demand during the tax holiday in Jun-Aug 2018. In 2018, Perodua (UMW and MBMR), Nissan (TCM), Mazda (BAuto), BMW (Sime) and Mercedes (DRB & C&C) reported higher YoY sales. We expect 2019 TIV to drop marginally to 596.6k units (-0.35% YoY), given high base in 2018 and moderating consumer sentiment. We maintain NEUTRAL on the sector given the moderating consumer sentiment in 2019 and weakened RM/USD outlook. Our top picks are BAuto (TP: RM2.70), DRB (TP: RM2.80) and Pecca (TP: RM1.35).

Dec 2018 TIV was reported flattish MoM at 48.2k units (-11.9% YoY; -0.2% MoM) as most of the sales was already concluded during the tax holiday between Jun and Aug 2018 coupled with the delay in several new model launches pending price approval from the authorities. However, the strong sales during tax holiday period pushed 2018 sales to 598.7k units (+3.8% YoY) in line with our forecast of 602.6k units (99.4% of forecast). With a high base in 2018 and expectation of moderating consumer sentiment in 2019, we expect 2019 TIV to drop slightly to 596.6k units (-0.35% YoY) vs. MAA’s projection of 600k units (+0.22% YoY).

We maintain our NEUTRAL rating on the sector as we expect TIV to remain relatively flat YoY in 2019 amidst moderating consumer sentiment and high base effect from 2018, as well as weakened RM/USD outlook. Our top picks are BAuto (TP: RM2.70), DRB (TP: RM2.80) and Pecca (TP: RM1.35).

Perodua (UMW and MBMR) reported lower sales at 18.4k units (-8.8% YoY; -12.8% MoM) following consumers’ anticipation of its upcoming sport-utility vehicle (SUV) model, Aruz. For full year 2018, Perodua reported sales of 227.2k (+10.9% YoY) units exceeding its sales target of 202k units, mainly attributed to the continued strong demand for its bestselling Myvi and Axia models. Perodua managed to maintain its leading position with market share of 38.0% in 2018.The recent introduction of Aruz will strengthen Perodua’s leading position as the seven-seater SUV has garnered 2,200 bookings since 3 Jan 2019.

Proton (DRB) reported higher sales at 5.6k units (+16.6% YoY; +16.1% MoM), mainly driven by the higher demand for its new SUV model, Proton X70. For full year 2018, Proton sales was reported at 64.7k units, down 8.8% YoY following stiff competition from other marques. The new Proton SUV X70 orders have exceeded 15k units with over 2k units already delivered. Proton is working to accelerate the delivery rate of the model in the coming months. We believe Proton sales in 2019 will be supported by X70 and another new models which will be introduced by Geely by year end

Honda (DRB) posted higher sales MoM sales by 13.0% but lower YoY by 28.5% at 8.0k units in Dec 2018. The higher MoM sales were due to year-end sales campaigns. In 2018, Honda sales dropped by 6.6% to 102.3k units, below its sales target of 109k units. However, Honda maintained its leading position within non-national segment with market share of 17.1% in 2018. Honda has officially launched the Honda HR-V facelift, which will be available with four variants. We expect Honda to introduce the new Accord in 2019.

Toyota (UMW) sales declined by 40.5% YoY but improved by 12.4% MoM to 4.3k units in Dec 2018. The higher MoM sales were attributed to its best-selling Toyota Hilux and aggressive year-end sales. For 2018, Toyota sales dropped by 5.7% YoY to 65.6k units, which was lower than the target of 70k units. Toyota is expected to achieve higher sales in 2019 from the upcoming launch of new Vios (CKD from new plant in Bukit Raja) and contribution from new Camry (CBU from Thailand).

Nissan (TCM) sales volume increased to 2.9k units (+26.8% YoY; +14.5% MoM) contributing to higher 2018 sales at 28.6k units (+5.4% YoY). The improvement was attributed to strong demand for the new Serena S-Hybrid. However, without new models in 2019, Nissan’s sales will likely be dismal due to its weak brand presence, dated model line up and intense competition from other marques.

Mazda (BAuto) car sales were down 23.2% MoM but up 104.1% YoY to 1.5k units in Dec 2018. In 2018, Mazda reported sales of 16.0k units (+64.8% YoY) following high demand for CX-5 (launched Nov 2017), facelifted Mazda 6 (Aug 2018) and facelifted CX-3 (Aug 2018). In 2019, Mazda will introduce the new Mazda CX-8 and new Mazda 3 in 2HCY19.

Others. BMW (Sime) reported lower MoM sales at 1.0k units (+0.7% YoY; -5.8% MoM) while Mercedes (DRB & C&C) registered higher sales at 1.1k units (-1.9% YoY; +17.8% MoM) in Dec 2018.

Source: Hong Leong Investment Bank Research - 18 Jan 2019