This article first appeared in The Edge Financial Daily on September 19, 2018

KUALA LUMPUR: The Malaysian Automotive Association (MAA) is not revising its annual total industry volume (TIV) of 585,000 vehicle units despite the strong sales during the three months tax holiday between June and August after the government zero-rated the goods and services tax (GST) and before implementation of sales and service tax.

The forecast of 585,000 vehicles is barely 1.5% growth against last year’s annual sales of 576,635 vehicles.

MAA president Datuk Aishah Ahmad told The Edge Financial Daily that although the GST-free window resulted in double-digit growth to TIV over the three-month period, vehicle sales are expected to be low until November this year, before auto firms start the year-end promotions to clear up inventory.

“Many buyers have purchased forward, so we expect TIV for the next few months to be low, for September, October and November. Our members will put in promotions and incentives by the end of the year, [so] we hope sales will normalised after that.

“Our forecast [for 2018] is 585,000 units. It should be achievable ... we are not revising it,” she said over the phone.

RHB Research head of Malaysian research Alexander Chia believes that MAA’s TIV forecast is achievable.

“Post-September, we expect monthly TIV to be between 40,000 and 45,000. We think it is achievable, because Perodua [Perusahaan Otomobil Kedua Sdn Bhd] alone can do about 20,000 units a month based on its backlog order,” he noted

Yesterday, MAA’s newly released vehicle sales data shows that TIV for the first eight months of this year was 423,730 units, or 72.4% of the association’s annual forecasted vehicle sales volume.

TIV volume for the period between January and August increased 10% from 384,722 units in the same period last year.

Passenger vehicle sales rose 9.48% to 378,026 units in the first eight months, from 345,280 units in the previous corresponding period, while commercial vehicle sales went up by 15.88% to 45,704 units, from 39,442 units.

For August alone, the MAA said sales volume increased by 26.8% to 65,551 units, from 51,716 units a year ago. Passenger vehicle sales increased by 21.2% to 55,772 units in August this year, compared with 46,008 units in the same month last year.

During the same period, commercial vehicle sales surged by 71.3% or 4,071 units to 9,779 units, from 5,708 units last year.

MAA said sales volume for September this year is expected to be lower than the August level as many of the purchases had been concluded before the end of the GST tax holiday period.

In its monthly statement, MAA said total vehicles produced in August increased by 8.47% to 47,387 units, from 43,688 units in the same month last year.

Meanwhile, total production for passenger vehicles rose 7.89% to 43,380 units in August, from 40,206 units a year ago, while commercial vehicle production was 15.08% higher at 4,007 units, from 3,482 units.

Cumulatively, total vehicles produced for the first eight months of this year was 383,498 units, which was 11.82% higher than 342,958 units in the same period last year.

Total passenger vehicles produced in the first eight months was 355,869 units, equivalent to 12.2% higher than 317,162 units in previous corresponding period, while commercial vehicle production rose by 7.11% to 27,629 units, from 25,796 units.

Affin Hwang analyst Brian Yeoh said the TIV decline magnitude for September can be “quite” substantial and is likely to be the weakest month in terms of vehicle sales this year.

“For September, we are expecting car sales to drop. In terms of magnitude, the decline can be quite heavy,” he said.

“September should be the weakest, we hope, followed by October, which we think would be weak as well. In November and December, car sales are likely to be reinvigorated by annual promotions, because many companies will try to clear their stocks,” he added.