TA Sector Research

Automotive Sector - TIV is Slowing Down

sectoranalyst
Publish date: Thu, 21 Dec 2023, 11:40 AM

Lower TIV in November

The monthly Total Industry Volume (TIV) in November has slowed down compared to the previous month. According to the Malaysian Automotive Association (MAA), November TIV dropped 4.0% MoM to 71.9k units. We believe the weaker performance could be due to buyers hold off purchasing until the year-end - December promotions, hoping to get better deals. A total of 65.2k units of passenger vehicles were sold in November (-3.3% MoM) while for the commercial segment, it has fallen by 10.2% MoM to 6.7k units. YTD, the TIV surged 11.5% YoY to 718.7k units, driven by both passenger and commercial car segments, which recorded total sales of 645.7k units (+12.6% YoY) and 73.1k units (+2.6% YoY), respectively (refer to Figure 1).

National Marques Registered Weaker TIV

Both national marques posted weaker TIVs in November. Perodua’s sales volume dropped 5.3% MoM to 32.1k units while Proton sales volume decreased by 2.5% MoM to 11.9k units. YTD, both national brands, Perodua and Proton, registered higher sales of 19.3% and 14.2% YoY to 299.1k units and 138.9k units, respectively. The combined market share of national cars increased to 67.8% for 11M 2023 compared to 65.0% recorded last year.

Honda and Volkswagen Registered Higher Sales Volume in November

Meanwhile, for non-national marques, all major brands registered lower TIVs in November, except Honda (+10.0% MoM) and Volkswagen (+17.3% MoM). We believe the higher sales volume for Honda could be attributable to its monthly promo for November, with total savings up to RM20k and other rewards. YTD, the combined sales of non-national cars increased by 3.4% YoY to 207.7k units, thanks to higher vehicle volumes registered by Toyota (+9.8% YoY) and Mazda (+38.1%), which offset lower sales volume from other marques (dropped in the range of 4.4% to 34.8%) (Please refer to Figure 2).

Supplies Are Improving and Demand Is Slowing

As we mentioned before, we expect the waiting period for new cars to shorten in 2024 as supplies of raw materials and parts can now catch up with demand. The sector seems to be returning to a state of normalcy as supply chain snags gradually ease. We see supplies are improving and demand has been slowing in recent months. Our TIV forecast for 2024 is maintained at 650k units (-15.6% YoY).

Maintain Neutral

We reiterate our Neutral recommendation for the sector. Maintained SELL on MBMR (TP: RM4.13) and HOLD on SIME (TP: RM2.50). Meanwhile, we downgrade BAuto (TP: RM2.33) to SELL due to limited upside. Lastly, our TP for UMW is benchmarked to the general offer price of RM5.00/share offered by SIME. We advise shareholders to accept the offer.

Source: TA Research - 21 Dec 2023

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