Proton on recovery path; slowly but surely regaining lost glitter

MALAYSIA’S first national car Proton has recouped some of its lost glory with its market share soaring to a seven-year high at 27.3% in February or 23.3% year-to-date (YTD) which puts it in a runner-up position behind Perodua’s 44.3%.

Amid the Malaysian Automotive Association’s (MAA) February’s total industry volume (TIV) of 42,784 units (+30% month-on-month [mom]; +4% year-on-year), Proton delivered 11,686 units (+96% mom; +17% yoy) with the X50 and X70 chalking up sales of 3,345 units and 1,431 units respectively for the month.

“We understand that the Proton B-segment X50 model has exceeded 50,000 booking units as of end-February with 8,200 units already delivered to customers,” revealed AmBank Research analyst Jeremie Yap in an automobile sector update.

“We gathered from our channel checks that the waiting period for the Proton X50 is more than six months, an indication of how well-received the model is locally.”

While the global chip shortage issues have not affect both SUVs, AmBank Research further noted that Proton has introduced its sales volume target for 2021 at 132,000 units.

Meanwhile, volume leader Perodua registered 16,583 units (-2% mom, -12% yoy) in February. The second national car company has introduced its 2021 sales volume target at 240,000 units.

All-in, AmBank Research maintained its “overweight” stance on the automotive sector with an unchanged TIV projection of 575,000 units for 2021.

“We expect the strong sales volume momentum to sustain throughout 1H 2021, bolstered by the extension of the SST (sales and service tax) exemption from Jan 1 until June 30,” justified the research house.

“We believe that the SST exemption will continue to spur buying interests for passenger vehicles, especially the national brands Proton and Perodua.”

The approval rate for loans on passenger cars stood at 60.8% in January, an increase of 6% from December 2020 as well as higher than the average of 54.8% in 2020.

On the hindsight, UOB Kay Hian Research does not expect “2021’s recovery to be a straight line”. Despite the extension of the SST exemption to end-June, the re-implementation of the movement control order (MCO 2.0) could dampen car sales if it lasts longer than expected.

“Consumers are likely to avoid visiting showrooms if COVID-19 cases spike again,” suggested analyst Muhammad Afif Zulkaply.

“Based on our channel checks, despite most distributors are gearing up efforts to generate online sales leads and leveraging on e-commerce platforms, the online sales contribution to total sales remains insignificant.

“Besides, car sales are likely to temporarily weaken once the SST exemption ends on June 30 and recovery will depend on the economic situation.” – March 24, 2021

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