KUALA LUMPUR (April 20): While the automotive sector's total industry volume (TIV) for the month of March rose about 23% m-o-m after declining for two straight months, CIMB Research still anticipates a tepid 2% TIV growth in 2018, driven by stronger growth in SUV demand on the back of multiple new model launches in 2H18.
Citing the Malaysian Automotive Association (MAA), CIMB analyst Mohd Shanaz Noor Azam in a research report yesterday said the stronger m-o-m sales in March 2018 is due to the longer working month and rush for deliveries by companies with March 31 financial year-ends.
TIV rose 23% m-o-m from 40,578 in February 2018 to 49,985 units in March 2018 on the back of improved sales from both foreign (+28%) and national (+19%) brands.
"MAA expects sales to stay flat m-o-m in April as consumers adopt a wait and see approach ahead of the upcoming 14th general elections in May," said Mohd Shanaz.
"We maintain our Underweight call on the sector due to persistent weakness in consumer sentiment and potential margin erosion from higher opex and intense competition," said Mohd Shanaz.
He noted that Perusahaan Otomobil Kedua Sdn Bhd (Perodua) grew its market share by 5.4 percentage points to 41.1% in 1Q18, mainly driven by the new Myvi model, while Proton's market share continued to slide due to lack of new model launches.
Honda retained its dominance among foreign brands with 17.9% market share, down 1.5 percentage points y-o-y, and Mazda successfully grew its market share by 1.1 percentage points to 2.5% in 1Q18, largely driven by its popular CX-5 model launched in 4Q17.
Nevertheless, he sees the strengthening of the ringgit versus US dollar and Japanese yen as positive for the automotive sector, as it will help automakers reduce the cost of importing completely knocked-down kits and completely built-up units.
He pointed out that Tan Chong Motor Holdings Bhd and UMW Holdings Bhd are winners of the ringgit's appreciation versus US dollar given that 50% of their total manufacturing costs are denominated in US dollar.