Apr 2019 TIV registered sales at 50.0k units (+6.1% YoY; -8.8% MoM) and YTD sales at 193.0k units (+5.9% YoY). The strong YTD growth was mainly driven by strong demand for new national SUV models, namely X70 (Proton) and Aruz (Perodua). We maintain our 2019 TIV expectation at 596.6k units (-0.35% YoY), as we expect slower growth by mid-2019 due to high base effect in 2018 during the tax holiday period. We maintain NEUTRAL on automotive sector given the moderating consumer sentiment in 2019 and weakened RM/USD outlook. Our top picks are BAuto (TP: RM3.08), DRB (TP: RM2.78) and Pecca (TP: RM1.35).

Malaysian Automotive Association (MAA) reported Apr 2019 TIV at 50.0k units (+6.1% YoY; -8.8% MoM) while YTD 2019 TIV stood at 193.0k units (+5.9% YoY). The YoY and YTD growth were mainly driven by the national SUV marques namely Perodua Aruz and Proton X70. On the other hand, the MoM drop was due to pent up deliveries in Mar post the long holiday break in Feb. We maintain our 2019 TIV forecast at 596.6k units (-0.35% YoY) as we expect lower sales growth by mid-2019 due to high base effect from 2018 on front-loaded purchases during the tax holiday period.

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: RM3.08), DRB (TP: RM2.78) and Pecca (TP: RM1.35).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: RM3.08), DRB (TP: RM2.78) and Pecca (TP: RM1.35).

Perodua (UMW and MBMR) continued to register high Apr sales at 22.1k units, a growth of 11.0% YoY, driven by new Aruz contribution, but dropped 4.9% MoM on pent up deliveries in Mar. YTD, Perodua sales was encouraging at 82.8k units (9.7% YoY), commanding 42.9% market share, thanks to strong demand for the new Aruz with 9,764 units being registered during the period. Demand for Aruz remained strong with almost 20k units of bookings by early-May since its launch in Jan. Perodua remains on track to achieve its 235k units of sales target for 2019.

Proton (DRB) posted another sales jump in Apr at 7.0k units (+75.3% YoY; +14.3% MoM), bringing YTD sales to 25.3k units (+50.2% YoY), mainly attributed to continued strong demand for its X70 SUV as well as higher demand for its new facelifted Iriz and Persona models (launched in Apr). Both the Iriz facelift and Persona facelift received encouraging bookings of 8,000 units, due to their attractive pricing and enhanced product quality and features. We note that Proton was one the only two major marques that registered positive growth MoM and reclaimed back second position with 14.0% market share behind Perodua in Apr. Proton is also slated to introduce X70 CKD, Saga facelift and another new Geely based small SUV model (likely X50) in 2H19. We believe Proton’s restructuring is on track and expected to turnaround in 2019 with a targeted sales volume of 100k units in 2019.

Honda (DRB) sales slipped in Apr to 6.2k units (-19.9% YoY; -28.8% MoM), dragging YTD sales to 28.4k units (-11.1% YoY). Honda sales was affected by new launches by major competitors namely Toyota, Perodua and Proton. Honda has recently introduced new colour variants for its CR-V, City and Jazz models in order to excite the market. Honda is currently behind its target sales of 95k units for 2019, while upcoming new model for the year is only Accord, which is unlikely to boost overall sales volume.

Toyota (UMW) sales dropped marginally by 0.9% YoY in Apr to 5.5k units as contribution from new Vios model was offset by lower sales of MPV, SUV and Pickup models. On MoM basis, sales dropped by 7.4% on slower Vios delivery, as market was holding back purchases prior to new model Yaris launch in Apr. YTD sales was 19.2k units, a growth of 5.4% YoY, driven by new Vios model. Similarly, Toyota is currently behind its sales target of 75k units for 2019.

Nissan (TCM) continued to record weak Apr sales of 1.6k units (+2.4% YoY; -21.6% MoM) and YTD sales at 6.8k units (-1.5% YoY). Nissan sales will remain challenging in 2019 due to its aged model line-up and lack of volume driving models that can boost its sales. Nevertheless, management has indicated new attractive models line up for 2020, including all new Kicks, Almera and Sylphy.

Mazda (BAuto) sales in Apr climbed up further to 1.3k units (+15.5% YoY; +28.9% MoM), boosting YTD sales to 4.6k units (+1.0% YoY). Demand for Mazda seemed to have normalized in Apr with 1k units for SUV models and 300 units for passenger car models. The market is anticipating for the attractive model line-up, consisting of Mazda 3 (Jun), CX-8 (Aug) and CX-30 (2H19).

Others. BMW (Sime) reported lower Apr sales at 0.8k units (-15.6% YoY; -17.4% MoM), bringing YTD sales to 3.3k units (-2.8% YoY). Similarly, Mercedes (DRB & C&C) posted weaker Apr sales at 1.0k units (-3.3% YoY; -28.2% MoM), dragging YTD sales at 4.0k units (-9.3% YoY).

Source: Hong Leong Investment Bank Research - 24 May 2019