• In Oct 2024, Total Industry Volume (TIV) rose by 20.4% MoM to 69,859 units, primarily driven by higher national car sales (+33% MoM). However, TIV declined by 8.3% YoY due to a high base last year. YTD 2024, TIV reached 664,002 units (+2.4% YoY) from 648,130 units in the same period last year.

• We believe the robust TIV performance in Oct 2024 was due to aggressive yearend promotional campaigns launched by automakers, aimed at clearing inventories and driving sales, coupled with a longer working month that provided additional time for dealerships to close sales and meet demand.

• We raise our 2024F and 2025F TIV forecasts to 800k and 810k units, driven by sustained demand, civil servant salary increments, and potential RON95 subsidy rationalization.

• We maintain our OVERWEIGHT recommendation for the Automotive sector. We have a BUY call on BAuto (TP: RM2.80) and SIME (TP: RM3.00) while a HOLD call for MBMR (TP: RM5.50).

TIV rose by 20.4% MoM in Oct 2024. In Oct 2024, TIV experienced a significant increase of 20.4% MoM to 69,859 units (Sep 2024: 58,032 units), primarily driven by a 33.1% MoM surge in the national car segment, led by higher Perodua's sales. Meanwhile, non-national car sales rose by 1.6% MoM to 23,881 units (Sep 2024: 23,501 units). We believe the spike in TIV was fueled by aggressive year-end promotional campaigns and a longer working month, enabling dealerships to capitalize on heightened consumer demand. However, on a YoY basis, TIV declined by 8.3% compared to 76,173 units in Oct 2023. For 10M24, TIV rose by 2.4% YoY, reaching 664,002 units (10M23: 648,130 units)

National car sales rose by 33.1% MoM. The significant MoM increase in the national car segment (Oct 2024: 45,978 unit, Sep 2024: 34,531 units) was driven by a 42.2% MoM surge in Perodua sales to 33,731 units (vs. 23,695 units in Sep 2024), supported by a healthy backlog of 100,000 units. Proton also posted a 13% MoM increase, underpinned by strong demand for the Saga, Persona, and Iriz, X50, while X70 sales remained robust. The segment continued to dominate with a 63% market share, led by Perodua at 44% and Proton at 19%

Non-national marques. The non-national segment recorded a modest 1.6% MoM increase in sales, reaching 23,881 units (Sep 2024: 23,501 units), maintaining a 37% market share. Toyota led the growth with a robust 16.3% MoM increase, driven by sustained demand for its key models, including the Vios, Hilux, and Alphard. Mazda also showed a solid performance, recording an 11% MoM rise, supported by strong sales of its CX series. Honda followed with a 2.8% MoM increase, benefiting from steady interest in its City and Civic models. On the other hand, Chery experienced a 3.1% MoM decline, potentially due to heightened competition and shifting consumer preferences within its segment.

Hybrid & Electric Vehicle (EV). According to the Road Transport Department Malaysia (JPJ), as of 10M2024, 17,403 EV units were registered in Malaysia. In Oct 2024, EV registrations rose by 4% MoM to 1,569 units (Sep 2024: 1,513 units), driven by higher BYD sales which surged by 47% MoM to 531 units (Sep 2024: 361 units). However, Tesla sales declined by 41% MoM to 265 units (Sep 2024: 450 units), while BMW sales fell by 25% MoM to 152 units (Sep 2024: 202 units). Despite this momentum, EVs still account for only 2.5% of total vehicle registrations at JPJ (Sep 2024: 700,045 units), significantly below the government's target of 20% by 2030. On the infrastructure front, as of 1st Oct 2024, Malaysia had 3,171 public charging points (2,358 AC units and 813 DC units). To meet the national target of 10,000 charging stations by 2025, an average of 439 AC and 49 DC charging points must be installed monthly.

Raise our 2024F/25F TIV. Following the Malaysia Automotive Association (MAA) recent upward revision of 2024 TIV target to 800k units from 765k, reflecting automotive domestic demand, resilience amid steady domestic economic conditions, we raise our 2024F TIV projection to 800k units (from our previous estimate of 710k units). Our upward revision is supported by sustained consumer demand, aggressive year-end promotions, improved vehicle availability, and the introduction of new models across national and non-national segments.

For 2025, we revise our TIV forecast upward to 810k units from 760k, reflecting a 1.3% YoY increase from our 2024F TIV of 800k units. This will be driven by the anticipated civil servant salary increments, which are expected to boost the disposable income and sustain automotive demand. Additionally, the potential RON95 subsidy rationalization presents an upside risk to our forecast, as it could drive a shift in consumer preferences. We expect high-income earners from the T15 group to accelerate their adoption of EVs to manage fuel expenses, while the M40 and B40 groups are likely to opt for more fuelefficient models, such as the Perodua Bezza and Axia, ensuring robust demand across segments.

Maintain OVERWEIGHT. We reaffirm our OVERWEIGHT stance on the Automotive sector, driven by resilient domestic demand. We maintain our BUY calls on BAuto (TP: RM2.80) and Sime Darby (TP: RM3.00), while keeping a HOLD recommendation for MBMR (TP: RM5.50).

Source: BIMB Securities Research - 20 Nov 2024