Automotive sector
Maintain neutral: Statistics released by the Malaysian Automotive Association showed a rebound of 13.4% month-on-month (m-o-m) to sales of 51,300 units in May, after a disappointing month in April due to the implementation of the goods and services tax. However, the total industry volume (TIV) remained weak given a drop of 8.4% year-on-year (y-o-y), on the back of muted consumer sentiment. Year-to-date (YTD), TIV declined by 3.6% y-o-y to 264,700 units. We maintain our flat TIV growth projection at 663,000 units for 2015 as we expect a lower base effect and normalising consumer sentiment by year end.

Perodua (UMW Holdings Bhd and MBM Resources Bhd) maintained its top spot at 17,300 units (up 7.4% y-o-y; down 1.7% m-o-m) with 33.7% market share in May. The demand for Axia remained strong, achieving 119,000 orders (75,000 units delivered by end-May). YTD, Perodua achieved 92,000 sales (up 18.5% y-o-y), on track to meet its targeted 208,000 units for 2015.

Proton (DRB-Hicom Bhd) regained second spot with 8,300 units (down 18.4% y-o-y; up 66.6% m-o-m) and 16.2% market share in May. YTD, Proton achieved 40,900 sales (down 22.7% y-o-y), indicating weak demand for its new model Iriz. Proton has entered into a memorandum of understanding with Suzuki 8 for future model development targeting the A and B segment market.

Toyota (UMW) sales improved to 7,500 units (down 7.3% y-o-y; up 25.1% m-o-m) after the launch of aggressive campaigns (offering rebates of up to RM6,000) in a bid to boost sales volume. YTD, Toyota sales totalled 29,800 units, behind its targeted 95,000 sales for 2015.

Honda (DRB-Hicom) sales remained healthy with 6,200 units (down 15.5% y-o-y; down 5.2% m-o-m), but down to second spot within the foreign segment. YTD, Honda achieved 34,900 sales (up 16.8% y-o-y) against a targeted 85,000 units for 2015.

Nissan (Tan Chong Motor Holdings Bhd) also reported sustainable sales at 3,400 units (up 6.6% y-o-y; up 6.9% m-o-m), retaining the third spot in the foreign market. YTD, Nissan achieved 20,100 sales against a targeted 45,000 units for 2015.

Sales for other marques remained relatively weak in May given combined sales of 8,600 units (down 22.5% y-o-y; up 23.9% m-o-m), with some exceptions such as Mercedes (DRB-Hicom and Cycle and Carriage Bintang Bhd) and Mazda (Berjaya Auto Bhd). — HLIB Research, June 22

This article first appeared in The Edge Financial Daily, on June 23, 2015.