• In Nov 2024, Total Industry Volume (TIV) declined by 3.3% MoM to 67,532 units, primarily driven by lower national car sales. Nonetheless, YTD 2024 TIV remained resilient at 731,534 units (+1.4% YoY) driven mainly by sustained buying interest in passenger vehicles throughout of the year.

• We believe weaker TIV performance in Nov 2024 was attributable to consumers adopting a wait-and-see approach ahead of year-end promotional campaigns by automakers aimed at clearing inventories and boosting sales.

• Moving forward, we expect TIV to remain strong, driven by resilient demand amidst civil servant salary increment that begins in Dec 2024, and year-end discount campaigns, similar to the 7% MoM growth in Dec 2023.

• We maintain our OVERWEIGHT recommendation for the Automotive sector. We have a BUY call on SIME (TP: RM2.60), and HOLD call for MBMR (TP: RM5.50). Additionally, we upgraded BAuto to HOLD (from SELL) with a lower target price of RM1.46 (from RM1.80) following its stock price weakness recently.

TIV declined by 3.3% MoM in Nov 2024. In Nov 2024, TIV experienced a decline by 3.3% MoM to 67,532 units (Oct 2024: 69,859 units), primarily attributed to a 5.5% MoM decline in the national car segment. This was partially offset by non-national car sales that grew by 0.9% MoM to 24,087 units (Oct 2024: 23,881 units). We believe the modest MoM decline reflects consumers’ wait-and-see approach ahead of yearend promotional campaigns by automakers. On YoY basis, TIV contracted by 7.8% as compared to 73,262 units in Nov 2023. Nonetheless, cumulative TIV for 11M24, increased by 1.4% YoY to 731,534 units (11M23: 721,392 units) supported by sustained demand throughout the year.

National car sales declined by 5.5% MoM. The modest MoM decline in the national car segment (Nov 2024: 43,445 unit, Oct 2024: 45,978 units) was driven by a 5.7% MoM decrease in Perodua sales to 31,808 units (Oct 2024: 33,731 units). Proton also posted a 5% MoM decline due to lower demand for the Iriz, X50, S70 and Persona, while X90 sales remained robust. The segment continued to dominate with a 64% market share, led by Perodua at 47% and Proton at 17%.

Non-national marques. The non-national segment reported a modest 0.9% MoM increase in sales to 24,087 units (Oct 2024: 23,881 units), sustaining a 36% market share. Growth was spearheaded by Honda, which recorded a strong 12.7% MoM increase, underpinned by resilient demand for key models such as the city, Civic, and HR-V. Notably, the Honda HR-V achieved sales of 1,923 units in Nov 2024, positioning as the highest-selling non-national SUV for the month, boosting cumulative YTD 2024 sales to 18,587 units. In contrast, performance among other brands was mixed. Mazda experienced a sharp 22% MoM decline, while Toyota and Chery recorded more modest contractions of 6.5% MoM and 1.5% MoM, respectively.

Hybrid & Electric Vehicle (EV). According to the Road Transport Department Malaysia (JPJ), as of 11M2024, 19,208 EV units were registered in Malaysia. In Nov 2024, EV registrations rose by 10% MoM to 1,805 units (Oct 2024: 1,569 units), driven by higher BYD sales which surged by 47% MoM to 783 units (Oct 2024: 531 units). This is followed by Tesla sales that rose by 3% MoM to 273 units (Oct 2024: 265 units). Meanwhile, BMW sales fell by 3% MoM to 148 units (Oct 2024: 152 units). Nonetheless, EVs only made up 2.5% of total vehicle registrations at JPJ (Nov 2024: 771,863 units), which is still significantly below the government's target of 20% by 2030. On the infrastructure front, Malaysia currently has 3,354 public charging points (2,398 AC units and 956 DC units). On average, 500 charging points must be installed monthly to meet the national target of 10,000 charging stations by end 2025

Maintain OVERWEIGHT. We reaffirm our OVERWEIGHT stance on the Automotive sector, supported by resilient domestic demand. Moving forward, we anticipate TIV to sustain its strong performance, driven mainly by the civil servant salary increment that begins in Dec 2024. Besides that, year-end discount campaigns, featuring aggressive discounts and attractive financing packages is likely to attract price-sensitive buyers and stimulate demand. Note that TIV increased by 7% MoM in Dec 2023, supported by similar promotional activities.

Key downside risks for our sector’s rating include (i) global supply chain disruptions, such as semiconductor shortages and production delays, which could limit vehicle availability and sales, and (ii) rising consumption costs will reduce affordability for lower-income groups, dampening demand for vehicles.

Taking all factors into account, we maintain a BUY call on SIME Darby (TP: RM2.60) and a HOLD on MBMR (TP: RM5.50). We also upgrade BAuto to a HOLD (from a SELL) given the weakness in share price. However, we revised lower our target price to RM1.46 (from RM1.80), pegged at a lower PER of 8.6x (BAuto’s -1.5 SD average 3-year PER) to FY25F EPS of 17.0sen. We think this is fair amidst stiff competition from Chinese EV.

Source: BIMB Securities Research - 24 Dec 2024