KUALA LUMPUR (Jan 23): Any potential hike in the overnight policy rate (OPR) by Bank Negara Malaysia (BNM) is negative for the automotive sector’s total industry volume (TIV), especially in the mass market segment, CIMB Research said.

In a note, the research house said Proton Holdings Bhd and Perusahaan Otomobil Kedua Negara Sdn Bhd (Perodua) could be affected from this, given their predominant exposure to mass market.

BNM is expected to raise the OPR by 25 basis points in its monetary policy committee meeting this week.

CIMB, along with TA Securities, maintained an underweight view of the sector, following 2017’s 15.6% year-on-year decline in TIV to 576,635 units announced by the Malaysia Automotive Association (MAA) yesterday.

This fell short of MAA’s 590,000 unit target and was attributed to floods in certain states in Peninsular Malaysia and an early start in excessive orders last year.

“Looking ahead, we expect TIV in January and February to fall, in line with the seasonal trend,” TA Securities said in a note today.

TA highlighted MAA had reduced its 2018 TIV forecast to 590,000 units form 619,000 units, on strict lending guidelines for hire purchase loans, the potential OPR hike and increasing popularity in ride hailing services.

Although the research house expects consumer sentiment to improve, more stringent loan requirements would be dampened, it said.

CIMB projects a tepid 2% growth in TIV for 2018, driven by stronger sales in the passenger vehicle segments.

“Nevertheless, we project commercial vehicle sales to continue to slide this year, due to weak demand for pick-up trucks,” TA Securities said.