We maintain UNDERWEIGHT on the sector with 2020 TIV target units of 420k (-31% YoY). According to the Malaysian Automotive Association (MAA), TIV for May 2020 registered sales of 22,960 units (>100% MoM, - 62% YoY), which reflected half-month vehicles collection sales, which started on 13th May 2020, being the 1st day of JPJ resuming operation with the relaxation of MCO guidelines. 5MCY20 reported TIV of 129,561 units (-49%), forming 30% of our 2020 sales target, as expected. Sales volume for June 2020 is expected to be higher than May 2020 with a full-month operation, coupled with the announcement of sales tax exemption by the government (average vehicles price reduction from 1%-6%) which correspondingly increased showroom traffic. Nonetheless, overall numbers would still be lower than traditional monthly registration prior to MCO, given social distancing resulting in long queues at PUSPAKOM and JPJ, cautious consumer spending on high-value discretionary items, and stringent loan approvals.
May 2020 registered sales of 22,960 units (>100% MoM, -62% YoY). The TIV numbers reflected half-month vehicles collection sales which started on 13th May 2020, being the 1st day of JPJ resuming operation with the relaxation of MCO guidelines. Note that, April 2020 sales units registered were only a statistic from JPJ e-Daftar system, with no actual delivery due to the MCO.
Taking a detailed look at the passenger vehicles segment (>100% MoM, -63% YoY), both MoM and YoY performances tracked the overall unit sales trend on the above-mentioned reasons. Perodua (>100% MoM, -66% YoY) was cushioned by its best-selling face-lifted Bezza, which was launched in early-January 2020, and supported by ARUZ (950 units sold in May at 12% of sales). Proton (>100% MoM, -47% YoY) sales were boosted by the all-new X70 CKD (798 units sold in May at 14% of sales), and supported by the face-lifted Proton Saga, Iriz, and Persona. Honda (>100% MoM, -75% YoY) sales mostly came from its top models of Honda City, Civic and BR-V. Toyota’s (>100% MoM, -49% YoY) sales growth was contributed by the all-new Toyota Vios, all-new Toyota Yaris, and Toyota Hilux, which comprised 77% of UMW Toyota sales. Mazda (>100% MoM, -52% YoY), showed increased delivery for face-lifted CX-5 and all-new CX-8. On the other hand, Nissan (>100% MoM, - 73% YoY) fared the worst due to dearth of all-new model launches.
Sales volume for June 2020 is expected to be higher than May 2020 with a full month business operation, coupled with the announcement of sales tax exemption by the government which correspondingly increased showroom traffic. Nonetheless, overall numbers would still be lower than the traditional monthly registration prior to MCO, given social distancing resulting in long queues at PUSPAKOM and JPJ, cautious consumer spending on high-value discretionary items, and stringent loan approvals, in our view. The quantum of vehicles price reduction under sales tax exemption are ;- (i) Perodua average price lower by 3%-6%, (ii) Proton average price lower by 1%-6%, (iii) Honda average price lower by 3%-5%, (iv) Toyota average price lower by 1%-5%, (v) Mazda average price lower by 2%-4%, and (vi) Nissan average price lower by 1%-6%.
We maintain UNDERWEIGHT on the sector with 2020 TIV target units of 420k (-31% YoY). We believe that national marques would fare worse than non-national marques as their target markets of lower to mid-income range is the most financially distressed segment. With the economy slowing sharply, MAA envisaged lower TIV forecast for 2020 at 400k units (-34% YoY). Furthermore, the planned new launches for 2HCY20 could be delayed given the weak consumer sentiment, but some reliefs could arise from sales tax exemption until end-of the year, better incentives program under NAP 2020, and positive impact from BNM’s overnight policy rate (OPR) cut and pre emptive measures to assist those who might be financially challenged by Covid-19 impact. Our economic research team is of the view that the MCO to contain the outbreak will adversely impact the economy in the short term with 2020 GDP expected to contract by 2.9%. Going forward, the final impact would depend on the outcome of containment measures and economic stimulus by the government.
Source: Kenanga Research - 25 Jun 2020
Created by kiasutrader | Aug 26, 2024