Automotive sector continues to break sales records
20 Apr 2023
The automotive sector has continued to break sales records as its March Total Industry Volume ( TIV) came in at an all- time high of 78,849 units which brought TIV for the first quarter of 2023 ( 1Q23) to 192,474 units.
March’s TIV figures translated to a 26 per cent month over month ( m- o- m) increase and an 8 per cent year over year ( y- o- y) increase.
Analysts were unsurprised by the strong numbers as they commented that the record numbers were due to March being a seasonally strong month and also the last month for carmakers to deliver SST- exempt orders.
Similarly, total production rose in tandem by 19 per cent m- o- m and 27 per cent y- o- y.
The research team at RHB Investment Bank Bhd ( RHB Bank) guided that production as largely driven by Proton who recorded a 65 per cent m- o- m increase and Perodua with a 33 per cent m- o- m increase.
“Perodua’s production of 32,771 units exceeded its monthly nameplate capacity of 29,000 units, likely thanks to extra shifts. Over at Proton, its Shah Alam plant continues to operate at full capacity while its Tanjung Malim plant’s utilisation rate stood at 44 per cent,” said the analyst.
While March was the end of SST- exempt deliveries, RHB Bank commented that the sector on the whole still offered earnings visibility as it continued sporting a healthy order backlog and normalised supply chain.
“Given the falling raw material costs and easing supply tightness, input costs should gradually decline from 4Q22 levels – which should have already reflected 2022’ s inflationary environment. In addition to earnings visibility, the sector offers attractive yields of four to 10 per cent,” it added.
Sharing a similar view, the research arm of Kenanga Investment Bank Bhd ( Kenanga Research) commented that consumer demand in the sector would continue to be supported by a stable economy, healthy job market and increase affordability of vehicles driven by the recent pause in Overnight Policy Rates ( OPR) by Bank Negara Malaysia ( BNM) and deferment of new excise duty regulations.
In the near term, April’s TIV is expected to be softer against the high base seen in March but it is still expected to translate to a robust TIV for 2Q23 with support from the aforementioned factors and highly anticipated new model launches.
These launches include the Perodua Axia, Proxton X90 and Toyota Vios.
For industry forecasts, the Malaysia Automotive Association ( MAA) has guided that their Total Industry Volume ( TIV) forecasts for 2023 is 630,000 units. In comparison, both RHB Bank and Kenanga research has guided higher forecasts of 680,000 and 720,000 units respectively.
Both analysts maintain their ‘ Overweight’ rating on the automotive sector with their top picks being MBM Resources Bhd and UMW Holdings Bhd due to their stakes in Perodua who continues to hold market dominance over the sector with 40.8 per cent market share, and Bermaz Auto Bhd due to its continued growth across all its marques.
According to Kenanga Research, Bermaz’s order backlog has already reach 8,000 units which is half of its 2023 sales target of 19,000 units.
The group’s premium mid- market Mazda brand is expected to drive total sales as it offers products that appeal to the middle- income group of consumers while commanding superior margins compared to its peers in the mid- market segment the research arm added.
Source: The Borneo Post
