KUALA LUMPUR (April 2): CIMB Research has maintained its “Neutral’ rating on the automotive sector as well as its flat total industry volume (TIV) growth forecast of 670,000 units this year.
In a note April 1, the research house said the reductions to car prices announced by several automakers as a result of the Goods and Services Tax (GST) implementation did not really come as surprise, as it had expected a minimal reduction due to the different tax methods pre- and post-GST, although the magnitude was slightly bigger than we had anticipated.
“We view this positively, due to higher affordability of cars in the country.
“Nonetheless, we do not expect a hike in industry sales volume since 1) carmakers have offered sizeable discounts since 2014 2) increase in price of other goods and services which will affect car sales, and 3) weak consumer sentiment.
“We keep our Neutral sector call and flat TIV growth of 670,000 units. Berjaya Auto Bhd remains our only Add call and our sector top pick,” it said.