Automotive sector prospects hinge on NAP 2018 review
KOTA KINABALU: While automotive sales have been surging thanks to the three-month zerorated GST tax break, analysts are still wary of the sector’s prospects which hinge on the upcoming National Automotive Policy (NAP) 2018 review.
In a recent sector update, the research arm of Affin Hwang Investment Bank Bhd (Affin Hwang Capital) detailed that the NAP 2018 would be based on the NAP 2014 with additional pillars in mobility, next-generation vehicles, artificial intelligence and industrial revolution 4.0.
The roll-out might see some delays as the research arm guided that the government is currently mulling on imposing new conditions on imported cars to prioritise local brands.
Nevertheless, Affin Hwang Capital believe that the possible move would not likely have a significant impact on distributors of foreign cars in Malaysia.
“In our view, the tougher restrictions could potentially only target the reconditioned (recon) car market rather than the locally listed foreign carmakers, as we do not expect the government’s new policy to negatively impact local assembly operations, which could then also have a detrimental impact on the entire automotive ecosystem,” opined the research arm.
Meanwhile, the Malaysian Automotive Association (MAA) has also revised its 2018 total industry sales volume (TIV) forecast to 585,000 units from 590,000 units as they expect a short-term dip in demand post implementation of the SST in September.
However, this should pick up again at the end of the year due to festive promotional activities, the research team added.
Affin Hwang Capital reported that four companies had expressed positivity on the sales boost from the three-month zero-rated GST tax holiday and believes that the upcoming SST implementation will not deter sales.
“Sime believes that the SST sticker price will not deter premium car purchases moving forward. Similarly, B Auto remains bullish on its Mazda car demand, considering it is the only auto player that will absorb SST for bookings made before September 1.