A sharp improvement. TIV for the month of May spiked up by 27% y-o-y due to the low base effect as vehicle sales hit bottom last year due to supply chain disruptions caused by Japan's earthquake and the Thai floods. More encouragingly, TIV surged 22% m-o-m, boosted by sales of Proton's recently launched Preve, and higher Honda sales as the car maker's utilization rate ramped up after months of shutdown following the Thai floods. This was bolstered by improved turnover as the hire purchase application processes smoothened, resulting in higher sales of entry-level cars, which were badly hit when the new lending guidelines took effect earlier this year.

How the top 5 marques finished. On a m-o-m basis, the outperformers among the top 5 marques were those which lagged previously, with Honda sales soaring 49%, Proton (+42%) and Perodua (+23%). The former benefited from higher plant utilization while the latter two national automakers saw a recovery in vehicle delivery on normalizing loan approvals as banks adapt to the new lending guidelines. On the other hand, UMW sales lagged its peers at 2% growth m-o-m given its already high base in the previous months due to a slew of new vehicle launches.

Forecasts intact. While the YTD TIV of -4.2% falls short on our forecast of a 1.1% growth, we still see encouraging volume for the ensuing months driven by new vehicle launches, not just from the top 5 but also other marques, in addition to the boost to volume in the entry-level segment, which we expect to pick up pace ahead of the upcoming festive season in 3Q.  In all, the growth numbers will perk up due to the low base effect caused by last year's earthquake in Japan and the devastating floods in Thailand.