Feb 2019 TIV recorded weak sales at 39.8k units (-1.8% YoY; -17.8% MoM) and YTD sales was reported at 88.3k units (+3.7% YoY). All OEMs registered lower MoM sales in Feb 2019, attributed to shorter working month in Feb, with the exception for Toyota which reported stronger MoM sales. We maintain our 2019 TIV expectation at 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. Our top picks are BAuto (TP: RM3.08), DRB (TP: RM2.58) and Pecca (TP: RM1.35).

According to Malaysian Automotive Association (MAA), TIV for Feb 19 dropped to 39.8k units (-1.8% YoY; -17.8% MoM). The TIV decline was in line with expectations as Feb is typically a shorter working month due to CNY celebration. However, cumulative YTD vehicles sales improved by 3.7% YoY to 88.3k units mainly attributed to continued favourable response to Proton and Perodua’s new sport-utility vehicles (SUVs), the X70 and Aruz. We maintain our 2019 TIV forecast at 596.6k units (-0.35% YoY) due to moderating consumer sentiment and high base effect from 2018 on front loaded purchases during GST zerorisation period in Jun-Aug 2018.

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. Our top picks are BAuto (TP: RM3.08), DRB (TP: RM2.58) and Pecca (TP: RM1.35).

Perodua (UMW and MBMR) reported sales at 17.2k units, relatively flat +0.7% YoY, but a drop of 14.3% MoM due to the shorter working month in Feb. YTD, Perodua reported sales of 37.4k units (+7.3% YoY) thanks to the strong demand for the newly launched Aruz and sustained demand for Myvi and Axia. Perodua maintained its leading position with market share of 43.3% in Feb 2019. The bookings for Aruz remained strong as Perodua managed to record up to 14k units since its launch in Jan 2019 and has delivered 4k units by mid Mar 2019. Given the continued strong demand for its bestselling Myvi and recently launched Aruz, we are positive that Perodua is on track for its target of 231k sales for 2019.

Proton (DRB) posted lower MoM sales by 23.0% but improved 37.0% YoY to 5.3k units sales in Feb, bringing YTD sales to 12.1k units (+40.6% YoY). The healthy YoY growth was mainly attributed to continued demand for its X70 SUV. As at end Feb, over 20k bookings have been placed for X70 with 6.9k units delivered in since it was launched. On its effort to improve the ownership experience of its products, Proton now has 75 3S/4S outlets operating nationwide. We believe Proton sales in 2019 will be supported by X70 and upcoming facelift Iriz and Persona.

Honda (DRB) registered lower sales in Feb at 5.3k units (-14.3% YoY; -20.2% MoM). YTD sales also slipped to 13.5k units (-10.7% YoY) affected by the newly introduced Vios as well as deteriorating consumer sentiment. Nevertheless, Honda still maintained its leading position among non-national segment with market share of 15.1% in Feb 2019. The recently launched facelifted HR-V has garnered over 8.5k bookings be end Feb with over 3k units being delivered (as of Jan 2019). We expect Honda sales in 2019 to be supported by the recently launched Honda HR-V facelift as well as the new Accord in 2019.

Toyota (UMW) sales improved to 4.7k units (+18.4% YoY; +49.7% MoM) bringing YTD sales to 7.8k units (+4.0% YoY). The higher sales for the month were due to full month contribution for the new Vios and marginally boosted by contribution from the new Rush. The recent launch of new Vios and upcoming Yaris car by 2Q19 will support Toyota sales target of 75k units vehicles in 2019.

Nissan (TCM) recorded lower sales at 1.1k units (-14.9% YoY; -44.8% MoM). YTD sales dropped by 5.9% YoY to 3.1k units. We believe Nissan sales will remain challenging due to aged model line-up and lack of volume driving models that can boost sales.

Mazda (BAuto) car sales declined to 0.7k units (-31.4% YoY; -56.6% MoM) in Feb 2018 with YTD sales at 2.3k units (-0.6% YoY). The temporary decline was due to shorter working month in Feb and we believe Mazda sales will normalize in Mar. We believe the upcoming new Mazda 3, CX-8 and CX-30 as well as continuous demand for its best-seller CX-5 will support Mazda sales in 2019.

Others. BMW (Sime) reported flattish sales at 0.8k units (+3.7% YoY; +5.6% MoM), bringing YTD sales to 1.6k units (-0.6% YoY). On the other hand, Mercedes (DRB & C&C) posted lower sales at 0.6k units (-51.3% YoY; -44.7% MoM) bringing YTD sales to 1.7k units (-31.9% YoY) in Feb 2019.

Source: Hong Leong Investment Bank Research - 20 Mar 2019