According to the Malaysian Automotive Association (MAA), TIV for October 2020 registered sales of 56,670 units (+0% MoM, +5% YoY). YoY growth were driven by higher delivery of SST-exempted vehicles, with higher production volume at respective automotive plants and promotional campaigns by carmakers to entice buyers. However, MoM growth was partially affected by the implementation of enhanced MCO in Kuala Lumpur, Selangor, Putrajaya and Sabah, and further weighed down by the ending of the loan moratorium impacting sentiment. Sales for November 2020 is expected to trend lower than October 2020 level with one full-month impact from expansion of enhanced MCO to all peninsular states except for Perlis and Pahang. For 10MCY20, the reported TIV of 398,159 units (-20% YoY) which forms 84% 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.

TIV for October 2020 registered sales of 56,670 units (+0% MoM, +5% YoY). YoY growth were driven by the higher delivery of SST-exempted vehicles, with higher production volume at respective automotive plants and promotional campaigns by carmakers to entice buyers. However, MoM growth was partially affected by the implementation of enhanced MCO in Kuala Lumpur, Selangor, Putrajaya and Sabah, and further weighed down by the ending of the loan moratorium. Sales for November 2020 is expected to drive slower than October 2020 level with one full- month impact from expansion of enhanced MCO to all peninsular states except for Perlis and Pahang (enhanced MCOs for certain states have been lifted on 21st November 2020).

Taking a detailed look at the passenger vehicles segment (+1% MoM, +6% 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, Toyota Mazda. Perodua (+7% MoM, +18% YoY) was driven by the all-new Perodua Axia, Myvi, and Bezza, and supported by ARUZ (3,192 units sold at 12% of sales). Note that, Perodua has reached its current maximum limit, producing up to 25k unit/month or running at 98%/99% of its plant capacity from August 2020, which will be maintained until all back-orders are fulfilled; consequently, pushing the launching of Perodua D55L to next year. Toyota’s (+5% MoM, +4% YoY) sales growth was contributed by the all-new Toyota Vios, Yaris, and the all-new Toyota Hilux (launched on 8th October 2020) while on 2nd November 2020, UMW Toyota announced the launch of the newly-revised Toyota Yaris and opened its order-book for registration. Mazda (+8% MoM, +31% YoY), reported increased delivery for face-lifted CX-5 and all-new CX-8. On the other hand, Nissan (-3% MoM, -11% YoY) is still suffering from the dearth of all-new model launches, but has recently launched the all-new Nissan Almera on 1st November 2020 which is expected to garner some positive feedback from brand loyalist. Proton (- 7% MoM, +16% YoY) was buoyed by the all-new X70 CKD (2,639 units sold at 24% of sales), and supported by the face-lifted Proton Saga, Iriz, and Persona. Note that, Proton has officially launched the all-new Proton X50 on 27th October 2020, but the first delivery to customers is on November 2020. Honda’s (-7% MoM, -14% 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 the 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 5.1%.

Source: Kenanga Research - 24 Nov 2020