KUALA LUMPUR: Malaysia’s automobile total industry volume (TIV) is targeted to hit 610,000 units this year with the sub-compact (B-segment) sport utility vehicle (SUV) continuing to lead the market and drive sales.
“We expect TIV to be relatively tepid in 2020 but a planned restructuring of (import) duties aimed at reducing vehicle prices will catalyse volume growth,” Maybank IB Research said in a note today.
The research house said several new models, especially in the second half of 2020, would excite the market such as Proton’s completely knocked down (CKD) X-70 and completely built up (CBU) X-50 models as well as Perodua D55L compact SUV, which is modelled after Daihatsu Rocky, thereafter.
Meanwhile, Nissan will likely roll out its much-anticipated latest edition of the Almera, while Toyota (four models) and Honda (three-four models) will compete with several launches.
Overall, Maybank IB expects Perodua to continue to retain market leadership and anticipates Proton as well as Nissan gaining some market share.
“With the competitive launches, competing marques, especially in the B-segment, will likely be aggressive in their advertising and promotional expenses for market share and volume sales, at the expense of margins.
“That said, talk of a plan to restructure duties, aimed at reducing vehicle prices, will be much welcomed, for it will be a catalyst for stronger vehicle sales beyond our 610,000 TIV target,” it added.
Maybank IB also believes that the much anticipated National Automotive Policy (NAP), which is scheduled to be unveiled in early 2020, will be the most scrutinised versus its predecessors.
“It is crucial for the policymakers to get this right this round for it will shape the direction of the nation’s automotive industry, in terms of competition and attracting foreign direct investments, in a challenging yet revolutionising market,” it said.
A sharp turn in consumer sentiment may affect vehicle sales, it added.
Additionally, it noted that foreign exchange volatility, especially the ringgit against the US dollar and yen, would affect margins of auto players exposed to these currencies.
The research house said MBM Resources Bhd topped its ‘buy’ list for its valuation (based on price-earnings ratio and dividend yield), target price upside, and its most leveraged exposure to Perodua.
It also has buy recommendations on UMW Holdings Bhd and Sime Darby Bhd.
MBM shares dropped four sen to RM3.90 at 3 pm, while Sime Darby was two sen lower at RM2.24 and UMW went down 14 sen to RM4.43. – Jan 8, 2020 Bernama
