Thursday 28 Mar 2024
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KUALA LUMPUR (March 20): Malaysia’s automotive sector saw an unsurprising decline in total industry volume (TIV) for the holiday-shortened month of February, with the industry expected to see muted growth through the rest of the year, according to analysts.

“We still project a tepid 2% growth in total industry volume (TIV) for 2018, driven by the stronger growth in SUV demand on the back of multiple new model launches this year,” CIMB Research said in a note today.

The research house retained its "Underweight" call on the sector due to persistent weakness in consumer sentiment, and potential margin erosion due to higher operating expenditures and intense competition.

The strengthening of the ringgit against the US dollar and the Japanese yen however, is a positive for the sector, as it will help lower the cost of imported units, the note added.

Meanwhile, Hong Leong Investment Bank (HLIB) maintained a "Neutral" outlook on the automotive sector, also forecasting a 2% TIV growth outlook for the full year.

“While the stronger ringgit may improve industry margins, higher basic material costs may partially offset the benefits of ringgit appreciation,” HLIB said in a note today.

Yesterday, data from the Malaysian Automotive Association (MAA) showed the nation’s vehicle sales fell 4.42% to 40,578 units in February, compared with 42,455 units a year ago, due to the Chinese New Year holidays. Month-on-month, sales volume declined 9% from 44,575 units in January.

Notably, Perodua expanded its dominant market share by 5.5% to 40.9% in February, mainly driven by demand for its new Myvi model, while Mazda also saw higher sales year-on-year, due to the launch of the new Mazda CX-5 model.

MAA expects sales in March to pick up due to a longer working month and a rush of deliveries for companies with a financial year ending March 31, 2018.

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