Automotive sector’s TIV falls to 62,800 units in February

The automotive sector’s total industry volume (TIV) in February has fallen by 4 per cent month on month (mo-m) and 1 per cent year on year (y-o-y) to 62,833 units.

In a sector update report, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said that the lower TIV during the month was due to a shorter working month due to the Chinese New Year break.

When looking at just the passenger vehicle segment, Feb TIV came in at 57,979 units which translated to a 2 per cent m-o-m contraction and a 3 per cent y-o-y growth.

Breaking down the results by marques, Toyota, Mazda and Proton saw respective m-o-m growths of 43 per cent, 35 per cent and 4 per cent as the three marques managed to sustain sales on continuous promotion on their vehicles offerings and overflow of vehicles delivery from a lower base in January.

Meanwhile, Perodua, Honda and Nissan saw respective mo-m contractions of 8 per cent, 12 per cent and 19 per cent.

Looking ahead, Kenanga Research opines that March TIV is expected to be higher due to the Hari Raya promotional campaigns currently ongoing.

However, for the year ahead they expected TIV to contract from the 800k units register in 2023 to 710k units, translating to a 11 per cent contraction.

This is due to lower demand for mid-market models as the impending fuel subsidy rationalisation is expected to affect the mid-market vehicle target demographic, the M40.

That said, they remain optimistic on vehicles. In the affordable segment as its main target demographic, the B4o group are likely to be spared the impact of subsidy rationalisation and could potentially benefit from the introduction of the progressive wage model.

Keeping a ‘Neutral’ call on the automotive sector, Kenanga Research guides that their top pick within the sector is MBM Resources Bhd (MBMR) due to their strong earnings visibility that is support by a larger 120k units of Perodua vehicles which is almost half of its 2023 sales target of 340k units.

Besides this, the research arm also points out that they reckon the player is a good proxy to the Perodua brand given its 23 per cent stake in the marquee and its attractive expected dividend yield of about 9 per cent.