RACING OUT OF SHOWROOMS

July figure is second highest ever recorded

NEW vehicle sales in Malaysia surged to 68,465 units last month — the second-highest monthly total industry volume in the automotive industry’s history — as buyers took advantage of the zero-rated Goods and Services Tax period. The Malaysia Automotive Association is expecting a similar performance for this month.

SALES of new vehicles surged to the second highest monthly total industry volume (TIV) ever last month, with 68,465 units driven off dealers’ showrooms.

Analysts expect this month’s sales to match or at least come close to the all-time high of 69,371 units recorded in December 2015, as buyers rushed to buy “cheaper” cars following the zero-rated Goods and Services Tax (GST) from June to this month.

The Malaysia Automotive Association (MAA) is optimistic that this month would see a similar performance as last month.

MAA said in a statement yesterday last month’s sales were 41 per cent, or 19,912 units, higher than the same period last year and six per cent, or 3,963 units, higher than in June.

Vehicles sales increased 7.6 per cent, or 25,173 units, in the first seven months of this year. Yearto-date, new vehicle production stood at 336,111 units, or 12.3 per cent higher than a year ago.

MAA has revised its TIV forecast for this year to 585,000 units from 590,000 units on expectations of a short-term dip in demand post-implementation of the Sales and Services Tax (SST) next month.

Affin Hwang Capaital said sales should pick up again by year-end due to festive promotions.

“Besides the uncertainty in government policies and impact from the re-introduction of SST, MAA believes other issues like the highly-saturated local car market, lack of economies of scale and high excise duties remain the dampeners to domestic car growth,” it said in a report.

Affin Hwang reiterates its “overweight” stance on the sector, and expects a TIV recovery and improvement in profit margins of automotive players.

It likes Sime Darby Bhd, Bermaz Auto Bhd and MBM Resources Bhd, tagging them with a “buy” call.

Affin Hwang is also keeping a watchful eye over the review of the National Automotive Policy as the assessment intends to encompass a new national car project, development of local companies and stepping up on exports.