According to the Malaysian Automotive Association (MAA), TIV for September 2020 registered sales of 56,444 units (+7% MoM, +26% YoY). Both MoM and YoY growths were driven by the higher delivery of SSTexempted vehicles, with the higher production volume at respective automotive plants and promotional campaigns by carmakers to entice buyers. Sales volume for October 2020 is expected to be negatively impacted from the implementation of 2-week CMCO in Kuala Lumpur, Selangor, Putrajaya and Sabah, and further weighed down by cautious sentiment from the ending of the loan moratorium. For 9MCY20, the reported TIV of 341,489 units (-23%) which forms 72% of our sales target of 475k (-21% YoY) is within expectation. We believe the new volume-driven launches in 4QCY20 (i.e. Proton X50, Honda City and Nissan Almera) could offset the cautious consumer sentiment impacted by both the CMCO and ending of loan moratorium. Maintain NEUTRAL.

September 2020 registered sales of 56,444 units (+7% MoM, +26% YoY). Both MoM and YoY growths were driven by the higher delivery of SST-exempted vehicles, with the higher production volume at respective automotive plants and on-going promotional campaigns by carmakers to entice buyers. Sales volume for October 2020 is expected to be negatively impacted from the implementation of the 2-week CMCO in Kuala Lumpur, Selangor, Putrajaya and Sabah, and further weighed down by cautious sentiment from the ending of the loan moratorium.

Taking a detailed look at the passenger vehicles segment (+8% MoM, +28% YoY), both MoM and YoY performances tracked the overall unit sales trend on the above-mentioned reasons. The strongest MoM take-up rate came from Perodua, Nissan and Toyota. Perodua (+11% MoM, +47% YoY) was driven by the all-new Perodua Axia, Myvi, and Bezza, and supported by ARUZ (2,524 units sold at 10% of sales). Note that, Perodua has reached its growth limit, producing up to 25k unit/month or running at 98%/99% of its plant capacity from July 2020, which will be maintained until all back-orders are fulfilled; consequently, pushing the launching of Perodua D55L to next year. Nissan (+11% MoM, -9% YoY) surprisingly showed positive MoM growth which we believe was due to attractive discount on out-going models of Almera, which is expected to roll-out its replacement in October 2020, but YoY, is still suffering from the dearth of all-new model launches. Toyota’s (+10% MoM, +26% YoY) sales growth was contributed by the all-new Toyota Vios, Yaris, and out-going Hilux, which comprised 70.5% of UMW Toyota’s sales. UMW Toyota S/B has launched the all-new Toyota Hilux on 8 th October 2020. On the other hand, Mazda (0% MoM, +169% YoY), showed increased delivery for face-lifted CX-5 and all-new CX-8. Proton (+4% MoM, +37% YoY) was buoyed by the all-new X70 CKD (2,822 units sold at 24% of sales), and supported by the face-lifted Proton Saga, Iriz, and Persona. Note that, Proton plans to officially launch the all-new Proton X50 soon. Honda’s (+4% MoM, +2% YoY) sales mostly came from its top models Honda City, Civic and BR-V. Note that, Honda has launched the all-new Honda City on 13th October 2020 but the anticipated City RS version has been delayed to January 2021.

Maintain NEUTRAL with 2020 TIV target of 475k units (-21% YoY). We believe the new volume-driven launches in 4QCY20 (i.e. Proton X50, Honda City and Nissan Almera) could offset the cautious consumer sentiment affected by both the CMCO and ending of loan moratorium on 30th September 2020. Note that, MAA envisaged TIV for 2020 of 470k units (-22% YoY). We believe that sales tax exemption until end of the year may help to spur sales along with better incentives program under NAP 2020, positive impact from BNM’s overnight policy rate (OPR) cut and pre-emptive measures to assist those whom might be financially challenged by Covid-19 impact. Nevertheless, we remain concerned with the economic impact from the pandemic with our economic research team having the view that 2020 GDP is expected to contract by 5.9%.

Source: Kenanga Research - 21 Oct 2020