Auto sales in July 2015 were slightly better than expected, up 2.1% MoM but slumped 2.7% YoY. We believe sales were mainly driven by extended Aidil Fitri promotions and heavy price discounts for some runout models. Sales for national marques, Proton and Perodua, staged a MoM rebound and rose 17.3% and 9.0% respectively. We reiterate our NEUTRAL call on the sector. Our Top Pick remains Berjaya Auto.
Extended promotions lift sales. According to the data from the Malaysian Automotive Association (MAA), auto sales in July improved slightly, gaining 2.1% MoM but eased 2.7% YoY to 58,646 units. Cumulative total industry volume (TIV) slumped -3.2% YoY to 380,830units. The second consecutive MoM improvement in TIV is a function of aggressive discounting by car manufacturers and dealers, likely at the expense of margins. The cut-throat market environment compels auto manufacturers to continue offering more promotions and discounts to entice consumers, who are becoming increasingly price-sensitive.
Nissan gets a good start to 2H15. Nissan was the only non-national marque to record both positive MoM and YoY growth. Nissan sales grew 10.9% MoM and 8.7% YoY to record 4,202 units sold. Its cumulative sales surged 6.2% YoY to 27,672 units. Sales of Toyota vehicles fell18.3% MoM to just 7,491 units. Both Honda and Mazda’s sales declinedMoM, but improved YoY and recorded higher cumulative sales compared to last year, backed by strong product ranges. Honda’s sales eased to 8,443 units (-2.6% MoM, +26.3% YoY) during the month but YTD sales rose 18.6% YoY. Meanwhile, Mazda’s total industry volume (TIV) slipped 1.3% MoM to 1,333 units (36.4% YoY).
Proton and Perodua lead the way. Proton recorded its highest ever monthly sales in 2015 (+17.3% MoM, -1.6% YoY) or a total of 10,867 units sold. The strong sales were sparked by its aggressive promotional packages that featured a zero down payment, low financing rates and an extended warranty of up to seven years. Meanwhile, Perodua sales continued to improve, underpinned by the runaway success of the Axia. Sales surged 9.0% MoM (-6.2% YoY) to 17,957 units, while its YTD sales surged to 126,459 units (+11.3% YoY).
Outlook. The second consecutive MoM record of higher sales, boosted by Aidil Fitri promotions, helped to lift TIV. However, we expect 2H15 to be marked by a soft undertone as aggressive promotions may haveresulted in consumers bringing forward their purchases as overall consumer spending continues to adjust to the post-GST environment. Headwinds confronting the auto sector include a weaker MYR, strictercredit standards and a slowdown in the general economy. W e maintain our 2015 TIV forecast of 650,000 units (MAA: 670,000 units).
Source: RHB Research - 20 Aug 2015
Created by kiasutrader | Jun 14, 2016
Created by kiasutrader | May 05, 2016