THE contrast of fate between the property and automotive sectors – both of which entail big ticket items – is so striking.
While real estate value is poised to remain soft at least in the near term, the same cannot be said of the automotive sector which is boosted by “several perks”.
Yesterday, the Malaysian Automotive Association (MAA) reported a strong monthly total industry volume (TIV) for December 2020 at 68,836 units (+25.5% year-on-year; +19.5% month-on-month), driven by sales and service tax (SST) exemptions and exciting new model launches.
In fact, TIV would have recorded a new high at 70,000 units if the lack of data from Mercedes and Scania are factored in, according to Hong Leong Investment Bank (HLIB) Research.
Nevertheless, the overall TIV for the year still dropped -14.4% yoy to 529,400 units for CY2020 – which was ahead of MAA’s projection of 470,000 units – affected mainly by the movement control order (MCO) imposed during 1H 2020.
The bullishness of the automotive sector’s prospect speaks for itself with TA Securities Research maintain its “overweight” stance with a 2021 TIV forecast of 627,000 units (+18.4% yoy).
“We expect the automotive sector to perform better in 2021 as demand outlook has improved with the extension of sales tax exemption (till end-June),” justified analyst Angeline Chin. “This is coupled with other positive drivers such as economic recovery and the accommodative interest rate environment.”
Moreover, the research house expects 2020-21 new models in the likes of the Proton X50, Perodua SUV, New Honda City, Nissan Almera Turbo, Toyota Vios and Yaris – alongside an increase in other completely knocked down (CKD) models – to drive sales higher this year.
MIDF Research concurred by re-affirming its “positive” outlook on the sector premised on a strong TIV recovery driven by the tax holiday extension, a low interest rate environment, a shift to private car usage from mass transport on concerns over social distancing and an underlying macro recovery.
“We keep our conservative FY2021F TIV of 550,000 (+4% yoy) unchanged with potential upside,” projected the research house.
“MCO 2.0 is a setback but extension of tax holiday, accommodative stance on operability of economic sectors, low interest rates and visibility of a vaccine roll-out buffers downside risk.”
Also retaining its “overweight” stance on the automotive sector is HLIB Research which maintains its CY2021 TIV expectation at 585,400 units (+10.6% yoy) driven by the extended SST exemption measures and the various new exciting models (launched late 2020 and early 2021). – Jan 27, 2021
