Apr19 Total Industry Volume (TIV) rose by 6.1% yoy to 50.0k units. Sequentially, Apr19 sales slipped by 8.8% due to lower sales of the non-national carmakers (ex-Mazda). Going forward, we expect sales volume to remain firm in May-Jun19, boosted by the Hari Raya festive promotional campaigns. The 4M19 TIV of 193k units (+5.9% yoy) accounts for 32% of our full-year forecast of 603k units (+0.7% yoy), within expectations. Maintain OVERWEIGHT.

Perodua Is Still the Champion; Proton Emerged as Strong Runner-up

Proton sold 7.0k vehicles in Apr19 (+75.3% yoy, +14.3% mom), finishing second in overall sales for the first time since Feb 16, thanks to the strong performance of the X70 (11.1k units delivered from the 25k bookings) and Saga models. Similarly, Perodua sold 22.1k vehicles

(+11.0% yoy, -4.9% mom) in Apr19, by far the highest monthly sales for April, underpinned by strong demand for its current line-ups. The strong sales for both marques have lifted the national carmakers’ 4M19 market share to 56% (4M18: 50.7%). We believe the overwhelming response to the X70/Aruz and refreshed models should continue to drive sales momentum for the national carmakers in 2019.

Softer Sales for Non-nationals, Except Mazda

Non-national carmaker’s 4M19 market share slid to 44.0% (4M18:49.3%), in tandem with the 5.5% yoy decline in sales volume to 84.9k units. In Apr19, Mazda stood out as the winner among the non-nationals – registering sales volume of 1.3k units (+15.5% yoy, +28.9% mom); we believe the upcoming CX8 launch (likely in 3Q19) and the healthy order backlog of 1.5k units should sustain its sales volume. Elsewhere, we learnt that the lower Toyota Apr19 sales of 5.5k units (-1.9% yoy, -7.8% mom) could be due to customers holding back purchases in anticipation of the all-new Yaris launch in mid-April. Meanwhile, the European brands’ 4M19 sales volume declined by 5.5% yoy to 7.7k units, affected by lower sales from Mercedes-Benz (-9.4% yoy) and BMW/Mini (-0.8% yoy).

Maintain OVERWEIGHT, Top Picks/Key Risks

Maintain OVERWEIGHT. Our sector top picks are Bermaz Auto (BAUTO MK) and MBM Resources (MBM MK). Downside risks could come from: i) a prolonged tightening of auto financing hindering the borrowing ability of car buyers; ii) exchange rate risk; and iii) a slowdown in the economy. Key event to watch out for is the upcoming National Automotive Policy 2019, expected to be unveiled by end-2Q19.

Source: Affin Hwang Research - 24 May 2019