According to the Malaysian Automotive Association (MAA), TIV for September 2021 registered 44,275 units (+153% MoM%, -23% YoY). There was significant improvement in MoM growth with the growing number of back-logged booking for the popular models (stretching up to 3 months for certain models). Activities for most industries including the automotive sector have already resumed at varying levels depending on vaccination rates and SOPs with support from continuous efforts by players to boost sales. Nevertheless, YoY growth was affected by the global shortage of computer chips for certain makes which have gradually recovered in tandem with global supply chain recovery. Sales in October 2021 is expected to be better than September 2021 as business operations have been fully restored nationwide with players ramping up car production and further boosted by the nationwide re-opening of inter-state travel. 9MCY21 TIV recorded 318,874 units (-7%), within our expectation at 69% of our 2021 TIV target of 460k units (-13%). Driving forward, we pegged our 2022 TIV target at 600k units (+30%), closely in line with MAA’s TIV target of 605k units (+21%). Our 2022 TIV growth will be driven by the expected recovery in economy post lockdown and revitalisation in local travel which should push demand for passenger vehicles as well as recovery in semiconductor chip supply. Additionally, a few automakers have assured their commitments to absorb SST beyond Dec 2021. Maintain NEUTRAL.

TIV for September 2021 registered 44,275 units (+153% MoM%, -23% YoY). There was significant improvement in MoM growth with the growing number of back-logged booking for the popular models (stretching up to 3 months for certain models), with most industries including the automotive sector already resumed at varying levels depending on vaccination rates and SOPs, while supported by continuous on-going efforts by players to boost sales. Nevertheless, YoY growth was affected by the global shortage of computer chips for certain makes which have gradually recovered in tandem with global supply chain recovery. Sales in October 2021 is expected to be better than September level as business operation have been fully restored nationwide with players ramping up car production with further boost from the recent nationwide re-opening of inter-state travel.

A detailed look at the passenger vehicles segment (+154% MoM, -27% YoY). Toyota (+199% MoM, +32% YoY)’s sales mostly came from its top models namely all-new Toyota Vios, Yaris, and Toyota Hilux. Proton (+274% MoM, -14% YoY)’s sales were due to the all-new X70 and X50 (3,901 units sold at 38% of sales), and supported by the face-lifted Persona, Iriz, Exora and Saga (collectively known as PIES). Honda (+187% MoM, -31% YoY)’s sales mostly came from City, Civic and BR-V with exceptional response for the all-new City. Nissan (+184% MoM, -29% YoY)’s all-new Almera has started to propel positive growth for the brand, but overall growth still lagged behind other marques from the dearth of all-new model launches. Perodua (+103% MoM, -43% YoY)’s sales were driven by the all-new Axia, Myvi, Bezza, and ARUZ and Ativa (3,656 units sold at 26% of sales); however, its popular model, MyVi was affected by computer chip supply issue. Mazda (+16% MoM, -32% YoY)’s sales were mostly contributed by the face-lifted CX-5 and all-new CX-8.

Maintain NEUTRAL with unchanged 2021 TIV target at 460k units (-13%) but we expect a strong recovery next year with 2022 TIV target of 600k units (+30%). With the re-opening of economic activities including sales and production for motor vehicles starting 13th August 2021 especially in the key states of Selangor and Kuala Lumpur, we expect buoyant recovery in car sales especially with the growing number of back-logged booking for the popular models as well as the usual year-end promotional sales campaign. Nevertheless, the recovery in car production could be limited by the on-going global constraint in semiconductor chip supply for certain models. We keep our 2021 TIV target at 460k units (-13%) tracking behind MAA’s 2021 target TIV of 500k units. We expect a stronger recovery next year with 2022 TIV target at 600k units (+30%), closely in line with MAA’s TIV target of 605k units (+21%). Our 2022 TIV growth will be driven by the expected recovery in economy post lockdown and the assumption that herd immunity would be achieved by then, inevitably resulting in relaxation of SOPs toward revitalising local travel which should push demand for passenger vehicles especially the affordable national marques as well as recovery in semiconductor chip supply. Additionally, a few automakers have assured their commitments to absorb SST beyond Dec 2021.

Source: Kenanga Research - 25 Oct 2021