According to the Malaysian Automotive Association (MAA), TIV for November 2020 registered sales of 56,489 units (+0% MoM, +7% YoY). YoY growth was driven by the higher delivery of SST-exempted vehicles, with higher production volume at the respective automotive plants and promotional campaigns by carmakers enticing buyers. However, MoM growth was partially affected by the implementation of enhanced MCO in various states. We expect sales for December 2020 to drive slower than November 2020 level bogged down by partial business closure and mitigative steps taken to avoid further spread of Covid19 among factories workers which seems to form a big portion of new cases recently. Nevertheless, for 11MCY20, the reported TIV of 454,708 units (-17% YoY) which forms 96% of previous sales target of 475k (- 21% YoY) is above expectation. Thus, we revised our 2020 TIV target higher to 500k units (-17% YoY). We believe the new volume-driven launches in 4QCY20 (i.e. Proton X50, Honda City and Nissan Almera) could help cushion the cautious consumer sentiment impacted by the various MCO. Maintain NEUTRAL.

TIV for November 2020 registered sales of 56,489 units (+0% MoM, +7% YoY). YoY growth was driven by the higher delivery of SST-exempted vehicles, with higher production volume at the respective automotive plants and promotional campaigns by carmakers enticing buyers. However, MoM growth was partially affected by the implementation of enhanced MCO in various states. We expect sales for December 2020 to drive slower than November 2020 level bogged down by partial business closure and mitigative steps taken to avoid further spread of Covid-19 among factories workers which seems to form a big portion of new cases recently.

Taking a detailed look at the passenger vehicles segment (-1% MoM, +7% YoY), both MoM and YoY performances tracked the overall unit sales trend on the above-mentioned reasons, but slightly lower MoM due to slower production delivery. The strongest MoM take-up rate came from Honda and Nissan which recently launched their most anticipated all-new Honda City (13th October 2020) and all-new Nissan Almera (1st November 2020), respectively. Honda’s (+61% MoM, +31% YoY) sales mostly came from its top models Honda City, Civic and BR-V. Honda has launched the all-new Honda City but the anticipated City RS version has been delayed to January 2021. Nissan’s (+31% MoM, +20% YoY) all-new Nissan Almera has started to propel positive growth for the brand, despite overall growth still lagging behind other brands from the dearth of all-new model launches. The strongest YoY take-up rate came from Mazda (+1% MoM, +64% YoY), which reported increased delivery for face-lifted CX-5 and all-new CX-8. On other hand, Proton (+2% MoM, +16% YoY) was buoyed by the all-new X70 CKD and X50 CKD (3,878 units sold at 35% of sales), and further supported by the face-lifted Proton Saga, Iriz, and Persona. Proton has officially launched the all-new Proton X50 on 27th October 2020, with the first delivery to customers on November 2020. Perodua (-14% MoM, +13% YoY) was driven by the all-new Perodua Axia, Myvi, and Bezza, and supported by ARUZ (2,617 units sold at 11% 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 (-15% MoM, -23% 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 with order-book opened for registration.

Maintain NEUTRAL with a higher 2020 TIV target at 500k units (-17% YoY) from 475k units (-21% YoY), previously. We believe the new volume-driven launches in 4QCY20 (i.e. Proton X50, Honda City and Nissan Almera) could help cushion the cautious consumer sentiment affected by both the CMCO and ending of loan moratorium on 30th September 2020. 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%. No changes in sector call and TP.

Source: Kenanga Research - 24 Dec 2020