ALTHOUGH vehicle sales in Malaysia can potentially hit a record high this year judging from the healthy monthly total industry volume (TIV) to-date, concerns loom over whether such prospect can be sustained going into 2023 given the myriads of macroeconomic headwinds ahead.
Even as it expects the 2022 TIV to reach an all-time high of 720,000 units, RHB Research has decided to stick to its 2022F TIV of 650,000 units for now.
“While we expect strong sector earnings in 2H 2022, our outlook remains cautious as macroeconomic headwinds could weigh on 2023 car sales and earnings,” projected analyst Jim Lim Khai Xhiang who reiterated his “neutral” stance on the automotive sector.
“Although new car orders have gradually recovered after falling significantly in July, they remain circa 20%-30% lower than the 1H 2022 average.”
Additionally, RHB Research is also concerned that new car orders in 2023 will likely remain subdued, as consumers hold back big-ticket discretionary purchases amid macroeconomic headwinds.
“To recap, we expect to see increases in the cost of borrowing, cost of living and prices of automobiles in 2023,” cautioned the research house.
Yesterday (Oct 19), the Malaysian Automotive Association (MAA) revealed that TIV for September totalled 67,659 units (+0.1% month-on-month; +53% year-on-year) in September, thus bringing year-to-date TIV to 516,798 units.
Although Proton’s unit sales declined by 2% and Perodua’s by 5%, both national marques still posted impressive monthly numbers at 34% and 13% higher respectively than their 2022 average unit sales.
On the contrary, MIDF Research retained its “positive” stance on the automotive sector as a play into a recovery in domestic consumption.
“Notwithstanding normalisation in OPR (overnight policy rate) and higher inflation (which in the Malaysian context is much better contained), prospects are underpinned by strong order bank and an improving labour market and household income condition while valuations are 25%-40% below historical mean,” opined analyst Hafriz Hezry.
“Overall, players are sitting on implied seven to 12 months waiting list. The strong order bank provides good revenue visibility for the sector moving into CY2023.”
Added Kenanga Research: “Furthermore, new bookings post-tax holiday has been holding up pretty well, ie around 20%-30% reduction vs average monthly bookings during the tax holiday while new bookings from July 2022 onwards will likely feed into TIV from April 2023 onwards, further cementing this revenue visibility from strong forward bookings.” – Oct 20, 2022
Main photo credit: WapCar
