According to the Malaysian Automotive Association (MAA), TIV for January 2021 registered sales of 32,829 units (-52% MoM, -24% YoY). Both MoM and YoY sales growth suffered from higher December 2020 preemptive buying base on exciting year-end promotional campaign, sluggish showroom activity from MCO 2.0, and shortage of components & parts for some players especially during the temporary closure of automotive factories in the 1st week of MCO 2.0. We expect slower February sales on shorter working month and held-back purchases with the expected new model launches in March 2021 especially the highly anticipated all-new Perodua ATIVA (booking opened, delivery March 2021). Maintain OVERWEIGHT with 2021 TIV target of 585k units (+11% YoY) and 3% ahead of MAA’s target of 570k units. We believe the new volume-driven launches (i.e. Perodua ATIVA, Proton X50, Honda City and Nissan Almera) could help spur sales along with the overflowing back-logged bookings and further boosted by the extension of SST exemption to 30 June 2021, seasonal promotions and more new launches in the 2H of the year. Our sector pick is MBMR (OP; TP: RM4.10) as a pure proxy to the largest Perodua national marque dealerships and deep value in its 22.58% stake in Perodua.

TIV for January 2021 registered sales of 32,829 units (-52% MoM, -24% YoY). Both MoM and YoY sales growth came off from a higher December 2020 base on pre-emptive buying driven by exciting year-end promotional campaign, sluggish showroom activity from MCO 2.0, and shortage of components & parts for some players especially during the temporary closure of automotive factories in the 1st week of MCO 2.0 that began 13th January. We expect slower February sales on CNY festivities, shorter working month and held-back purchases with the expected new model launches in March 2021 especially the highly anticipated all-new Perodua ATIVA (booking opened, delivery March 2021).

Taking a detailed look at the passenger vehicles segment (-54% MoM, -27% YoY), both MoM and YoY performances tracked the overall unit sales trend on the above-mentioned reasons. Perodua (-33% MoM, -3% YoY) was driven by the all-new Perodua Axia, Myvi, and Bezza, and supported by ARUZ (1,818 units sold at 11% of sales). Note that, Perodua has recently launched its all-new Perodua ATIVA SUV with booking opened and expected official launches and delivery in March 2021. Proton (-53% MoM, -30% YoY) was buoyed by the all-new X70 CKD and X50 CKD (1,974 units sold at 33% of sales), and further supported by the face-lifted Proton Saga, Iriz, and Persona. Proton has officially launched the all-new Proton X50 on November 2020 and recently introduced limited-edition variant of its older line-ups. Toyota’s (-58% MoM, -6% YoY) sales mostly came from its top models all-new Toyota Vios, Yaris, and the all-new Toyota Hilux with overwhelming delivery of face-lifted Vios and Yaris which were officially launched on 17th December 2020.Fsales were mostly contributed by face-lifted CX-5 and all-new CX-8 and the ending of its attractive 6-year/120,000-km warranty and free maintenance (including labour, parts and lubricants) package for new vehicles purchased (except the BT-50) up to December 2020 hampered its January sales significantly. Nissan’s (-62% MoM, -47% YoY) all-new Almera has started to propel positive growth for the brand, despite its overall growth that still lags behind other brands from the dearth of all-new model launches. Honda’s (-87% MoM, -76% YoY) sales mostly came from its top models Honda City, Civic and BR-V with exceptional response for its most anticipated all-new Honda City (13th October 2020). The main culprit behind the worst Honda sales growth and market share was due to the insufficient ready stocks from the closure of automotive factories during the first week of MCO 2.0.

Maintain OVERWEIGHT with 2021 TIV target of 585k units (+11% YoY). We believe the new volume-driven launches (i.e. Perodua ATIVA, Proton X50, Honda City and Nissan Almera) could help spur sales along with the overflowing back-logged booking and further boosted by the extension of SST exemption to 30th June 2021, seasonal promotions and more new launches expected in the 2H of the year. Overall, 2021 could potentially be a better year along with better incentives program under NAP 2020, positive impact from BNM’s overnight policy rate (OPR) cut and pre-emptive measures that soften the Covid-19 impact. Our economics research team have the view that an expected global growth recovery and the impact of the large fiscal stimulus on domestic economy would result in a projected GDP growth rebound of 4.5% in 2021 (MoF: 6.5% - 7.5%; 2020: -5.6%).

Source: Kenanga Research - 23 Feb 2021