THE automotive industry is looking at a stronger second half of 2020, according to MIDF Research, citing the sustained total industry volume (TIV) recovery in July.
“The auto industry registered its second consecutive month of post-movement control order (MCO), year-on-year (yoy) growth, in July,” said MIDF analyst Hafriz Hezry.
The analyst cited the Malaysian Automotive Association (MAA), noting that TIV in July came in at 57,552 units, a growth of 13% yoy and 29% month-on-month (mom). July also marks the first full month for the impact of the Penjana tax holiday incentive, which started mid-June.
Hafriz also noted a potential upside risk, stating that the TIV in July is ahead of MAA’s average target of 49,000 units per month for 2H20, and this is also before the boost from the typical year-end sales campaigns, as well as ahead of major launches.
“MAA is expecting August TIV to sustain at July levels supported by the tax holiday which runs till Dec 31, on top of promotional campaigns by players,” said the analyst.
The analyst believes that the early trends of a recovery are very encouraging, pointing towards the tax-holiday-induced demand, the robust liquidity created for consumers due to stimulus measures, as well as a low interest rate environment as factors driving the rebound in vehicle-buying sentiment.
Noted as well is that Proton, Perodua, Toyota, and Mazda have all gained market share relative to July 2019. Conversely, Honda and Nissan have lost significant market share in the period.
MIDF reaffirms its positive call on the auto industry, with Bermaz Auto Bhd and UMW Holdings Bhd as top picks, with buy calls and target prices of RM1.95 and RM3.40 respectively. – Aug 25, 2020
