According to the Malaysian Automotive Association (MAA), TIV for March 2021 registered 63,878 units (+49% MoM, +201% YoY). Both MoM and YoY sales growth revved stronger with exciting all-new launches especially the highly popular all-new Perodua Ativa (14,574 outstanding bookings until 30th March, 4,345 units delivered), rush of deliveries for players with FYE March 2021, on-going SST-exempted sales promotion, and lower base in March 2020 from the first MCO. We expect April sales to match March numbers with the on-going aggressive promotional campaigns and continued delivery of back-logged booking of all-new launches. 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: RM4.90) as a pure proxy to the largest national Perodua dealership and deep value in its 22.58% stake in Perodua.

TIV for March 2021 registered 63,878 units (+49% MoM, +201% YoY). Both MoM and YoY sales growth revved stronger ignited by exciting all-new launches especially the highly popular all-new Perodua Ativa (14,574 outstanding bookings until 30th March, 4,345 units delivered), rush of deliveries for players with FYE March 2021, on-going SST-exempted sales promotion, and lower base in March 2020 from the first MCO. We expect April sales to match March numbers with the on-going aggressive promotional campaign and continued delivery of backlogged booking of all-new launches especially Perodua Ativa and Perodua X50.

Taking a detailed look at the passenger vehicles segment (+52% MoM, +203% YoY), both MoM and YoY performances tracked the overall unit sales trend on the above-mentioned reasons. Toyota’s (+107% MoM, +155% YoY) sales mostly came from its top models namely all-new Toyota Vios, Yaris, and Toyota Hilux with overwhelming delivery of face-lifted Vios and Yaris which were officially launched on 17th December 2020. UMW introduced the all-new Toyota Corolla Cross on 25 March 2021 which has garnered positive response, which is a CBU model from Thailand with local assembly expected to start in the second half of the year. Honda’s (+103% MoM, +172% YoY) sales mostly came from Honda City, Civic and BR-V with exceptional response for the all-new Honda City (launched 13th October 2020).

Nissan’s (+98% MoM, +338% YoY) all-new Almera has started to propel positive growth for the brand, but overall growth still lags behind other marques from the dearth of all-new model launches. Mazda’s (+73% MoM, +134% YoY) sales were mostly contributed by face-lifted CX-5 and all-new CX-8 with a recovery in February after the surprise termination 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) hampered its January sales significantly. Perodua (+47% MoM, +184% YoY) was driven by the all-new Perodua Axia, Myvi, and Bezza, and boosted by ARUZ and Ativa (6,857 units sold at 28% of sales) with the all-new Perodua Ativa recording 14,574 outstanding bookings until 30th March with 4,345 units delivered. The surge in sales in March was underpinned by strong demand, particularly for the Ativa, chalking up sales way ahead of its 3,000-unit monthly target. Proton (+26% MoM, +351% YoY) was buoyed by the all-new X70 and X50 (5,750 units sold at 39% of sales), with bulk of sales coming from X50 CKD (3,513 units, total 11,654 units delivered since launches) and further supported by the face-lifted Proton Saga, Iriz, and Persona.

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 overflowing back-logged bookings 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 with 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 6.5% in 2021 (BNM: 6.0% - 7.5%; 2020: -5.6%).

Source: Kenanga Research - 22 Apr 2021