‘Auto in­dus­try will con­tinue to weaken in 2017’

The Sun (Malaysia) - - SUNBIZ -

PETALING JAYA: Hong Leong In­vest­ment Bank (HLIB) Re­search ex­pects the au­to­mo­tive in­dus­try to con­tinue to weaken in 2017, due to con­tin­ued weak con­sumer sen­ti­ments as well as the weak­en­ing of the ring­git, which has had an im­pact on cost struc­tures and mar­gins.

In a re­port yes­ter­day, its an­a­lyst Daniel Wong said the tight bank lend­ing re­quire­ments have also af­fected sales vol­ume.

Nev­er­the­less, Wong said the re­search house ex­pects the na­tional orig­i­nal equip­ment man­u­fac­tur­ers (OEMs) to sus­tain their sales vol­ume next year.

Last week, the Malaysian Au­to­mo­tive As­so­ci­a­tion re­ported that Malaysian au­to­mo­tive sales fell 14.17% to 47,879 units last month, from 55,788 units in the pre­vi­ous year’s cor­re­spond­ing pe­riod, re­flect­ing sub­dued con­sumer sen­ti­ment on the weak­ened ring­git and the gov­ern­ment’s sub­sidy ra­tio­nal­i­sa­tion ex­er­cises.

How­ever, Wong said the to­tal in­dus­try vol­ume (TIV) is ex­pected to im­prove in the last two months of the year (Novem­ber and De­cem­ber), as orig­i­nal equip­ment man­u­fac­tur­ers have launched ag­gres­sive sales cam­paigns to boost year-end sales vol­ume in order to achieve tar­gets and clear ex­ist­ing in­ven­to­ries.

In Oc­to­ber, Perusa­haan Oto­mo­bil Ke­dua Sdn Bhd (Pero­dua) re­ported weaker sales of 16,100 units (less 6.7% year-on-year), which was mainly af­fected by new launches by Pro­ton Hold­ings Bhd.

How­ever, Wong said the re­cent ag­gres­sive sales cam­paigns for MyVi and Alza are ex­pected to push Pero­dua’s year-end sales and achieve its tar­get of 216,000 sales.

Year-to-date, Pero­dua reg­is­tered 167,000 sales (less 4.5% year-on-year).

Mean­while, Wong said, Pro­ton sales im­proved month-on-month to 7,600 units (less 4.8% year-on-year) on new con­tri­bu­tion of Per­sona and Saga.

How­ever, he said new model sales seemed to be lower than monthly ex­pec­ta­tions of 8,000 to 10,000 units, while new model MPV Er­tiqa has been de­layed, sug­gest­ing and urgency to ex­e­cute its re­struc­tur­ing plan.

Honda Malaysia sus­tained sales at 8,200 units (less 3.5% year-on-year), af­ter launch of ag­gres­sive sales cam­paigns with dis­counts of up to RM7,000.

Wong said Honda, which pre­viewed new mod­els BRV and Jazz hy­brid re­cently, could bring in new mod­els into the Malaysia mar­ket in 2017.

Toy­ota sales re­mained weak at 5,500 units (less 38.9% year-on-year), dragged by on-go­ing weak con­sumer sen­ti­ment and stiff com­pe­ti­tion, while Nis­san sales plunged to 2,500 units (less 14.8% yearon-year), which is its lowest monthly sales since 2012.

Toy­ota re­cently launched ag­gres­sive sales cam­paigns with dis­counts up to RM10,000, in order to boost year-end sales vol­ume.

Given lack of new mod­els for 2016-17, Wong said, Nis­san will con­tinue to rely on ag­gres­sive mar­ket­ing to boost its sales vol­ume. “Other mar­ques recorded com­bined sales of 7,800 units (less 14.6% year-on-year), led by Isuzu (DRBHi­com), Mazda (Ber­jaya Auto) and Mercedes (DRB Hi­com & C&C).”

HLIB Re­search is main­tain­ing its un­der­weight call on the au­to­mo­tive sec­tor, with MBM Re­sources Bhd as its top pick, with a tar­get price of RM3.08.

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