Kenanga Research sees 2019 auto TIV at 590,000 units

KUALA LUMPUR: Kenanga Research expects total industry volume (TIV) for the automotive sector for 2019 at 590,000 units, backed by new car models such as the all-new Toyota Vios and Yaris Hatchback as well as competitive all-new models from Honda, Nissan, Mazda and Proton.

It said in its research note yesterday that the newer car models would be able to offset the absence of the one-off 2018 tax holiday. Kenanga has maintained a neutral rating on the automotive sector.

“The MIER consumer sentiment index scored 107.5 points in third quarter 2018 (3Q18), which is above the optimistic threshold at 100 points as consumers raced to spend during the remainder of the zero-rated tax holiday.

“Subsequently, the latest Bank Negara Malaysia (BNM) data showed the loan approval rate for passenger cars is still above the five-year loan approval rate average of around 55 per cent, credit to the zero-rated tax holiday,” it said.

It also noted that 4Q18 sales are expected to slow down after consumers completed their large orders during the zero-rated tax holiday which saw the emergence of a second all-time highest monthly TIV sales in July 2018 as well as price adjustments with the implementation of the new Sales and Services Tax (SST).

“However, the impact was cushioned by the usual yearend season promotion. With the new SST gazetted on Sept 1, 2018, vehicles are charged a 10 per cent sales tax.

“Nevertheless, from the recent announcements by certain car makers, the prices for locallyassembled and completelyknocked-down (CKD) units have dropped by 1 per cent to 3 per cent,” it said.

Kenanga attributed the price decrease for locally-assembled and CKD units to better compliance to Industrial Linkage Programme regulation, which provides incentives and duty exemption for originalequipmentmanufacturers that use local components.

“The negative impact of SST on sales volume was less than expected as some of the car makers locked the zero-rated prices for back-logged orders during the zero-rated holiday, while the car prices during the new SST period, especially CKD units, were lower, which helped cushion the impact,” it added. — Bernama