According to the Malaysian Automotive Association (MAA), TIV for October 2021 registered 63,489 units (+43% MoM, +10% YoY). There was significant improvement in both MoM and YoY growths with the ramped-up production to fulfil back-logged booking of popular models (stretching up to 6 months for certain models), with full and longer working month of business operations worldwide. This was the second time the monthly TIV has exceeded the 60,000 units mark (TIV in March 2021 was 64,875 units). Sales in November 2021 are expected to be maintained around October level with players continuing to ramp up car productions, boosted by year-end promotional campaign. 10MCY21 TIV recorded 382,379 units (-5%), above our expectation. With the higher-than-expected production delivery of volume-driven models, we upgrade our 2021 TIV target to 505k units (-5%) from the previous 460k units (-13%), tracking ahead of MAA’s 2021 target TIV of 500k units. We expect a stronger recovery next year with 2022 TIV target at 600k units (+19%), closely in line with MAA’s TIV target of 605k units (+21%). Nevertheless, for certain models, recovery in production could be limited by the on-going global constraint in computer chip supply. Maintain NEUTRAL.

TIV for October 2021 registered 63,489 units (+43% MoM, +10% YoY). There was significant improvement in both MoM and YoY growths with the ramped-up production to fulfil back-logged bookings for popular models (stretching up to 6 months for certain models), with full and longer working month of business operations worldwide. This was the second time the monthly TIV exceeded the 60,000 units mark (TIV in March 2021 was 64,875 units). Sales in November 2021 are expected to be maintained around October level with players continuing to ramp up car productions, boosted by year-end promotional campaign.

A detailed look at the passenger vehicles segment (+48% MoM, +8% YoY). All marques registered higher MoM growth on full capacity production and from a lower base in October especially Perodua and Honda of which the popular models of Perodua Myvi and Honda City respective production levels recovered significantly. Perodua (+97% MoM, +4% YoY)’s sales were driven by the all-new Axia, Myvi, Bezza, and ARUZ and Ativa (5,314 units sold at 19% of sales). Honda (+59% MoM, +18% YoY)’s sales mostly came from City, Civic and BR-V with exceptional response for the all-new City. Mazda (+35% MoM, -15% YoY)’s sales were mostly contributed by the facelifted CX-5 and all-new CX-8. Proton (+25% MoM, +17% YoY)’s sales were due to the all-new X70 and X50 (5,817 units sold making up 45% of sales), and supported by the face-lifted Persona, Iriz, Exora and Saga (collectively known as PIES). Nissan (+22% MoM, - 11% 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. Toyota (+2% MoM, +27% YoY)’s sales mostly came from its top models namely all-new Toyota Vios, Yaris, and Toyota Hilux.

Maintain NEUTRAL with a higher 2021 TIV target at 505k units (-5%) from previous 460k units (-13%), with a stronger recovery next year with 2022 TIV target of 600k units (+30%). With the re-opening of economic activities, further driven by the 100% sales tax exemption on CKD passenger vehicles and 50% on CBU including SUV and MPV for six months until 30th June 2022, we expect buoyant recovery in car sales especially with the growing number of back-logged bookings for popular models as well as the usual year-end promotional sales campaign. With the higher-than-expected production delivery of volume-driven models, we upgrade our 2021 TIV target to 505k units (-5%) from the previous 460k units (-13%), tracking ahead of MAA’s 2021 target TIV of 500k units. We expect a stronger recovery next year with 2022 TIV target at 600k units (+19%), closely in line with MAA’s TIV target of 605k units (+21%). Our 2022 TIV growth will be driven by the 1HCY22 SST exemption, expected recovery in the 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. Nevertheless, for certain models, the recovery in car production could be limited by the on-going global constraint in semiconductor chip supply. We made no changes to the automotive players under coverage pending the next results announcement.

Source: Kenanga Research - 25 Nov 2021