CIMB cuts Malaysian automotive sales volume forecast

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KUALA LUMPUR (June 21): CIMB Investment Bank Bhd cut its 2016 Malaysian automotive sales volume forecast to 613,000 vehicles from 667,000 on weak consumer sentiment.

In a note, CIMB analyst Mohd Shanaz Noor Azam said given weak consumer sentiment and higher car prices due to higher input cost, consumers were postponing big-ticket item purchases.

"We cut our sales volume forecast from 667,000 to 613,000 units or down 8% yoy (year-on-year) and assume conservative growth in the remaining months of the year," Mohd Shanaz said.

CIMB's note followed May industry data, which showed new vehicles sales volume fell from a year earlier.

During the month, vehicle sales, as measured by total industry volume (TIV), fell 12.8% on-year to 44,669 units while TIV for the first five months dropped 18% on year to 218,113 units. On a monthly basis, May TIV, however, improved 6%.

Mohd Shanaz said CIMB expected Hari Raya Aidilfitri promotional campaigns and new car launches to boost vehicle purchases in the coming months.

"Despite upcoming new launches in the remainder of the year and promotional campaigns by manufacturers running up to the Hari Raya period, we expect full-year sales volume to decline yoy," he said.

Mohd Shanaz said CIMB maintained its "neutral" call on the automotive sector. Berjaya Auto Bhd is CIMB's top automotive industry pick.

"Berjaya Auto is our top pick due to Mazda's sustainable sales volume growth. Successful new model launches are potential re-rating catalysts." he said.

At 11:31am, Berjaya Auto shares rose three sen or 1.3% to RM2.35, valuing the company at RM2.7 billion. The stock saw 1.2 million shares traded.