Car sales to move into higher gear on better consumer mood

PETALING JAYA: Analysts foresee continued growth in car sales volume this year to about 590,000 units on better consumer sentiment.

The total industry volume (TIV) dropped marginally by 0.6% to 576,600 units in 2017.

Hong Leong Research expects the 2018 TIV to increase marginally by 2% to 588,100 units, driven by new model launches, uptrend of consumer sentiment and the normalisation impact of tighter bank lending guidelines.

It foresees the automotive sector experiencing a gradual recovery with the normalisation of consumer sentiment, which was dragged by the weak ringgit in 2017.

However, Kenanga Research has cut its car sales to 590,000 units for 2018 from 600,000 units previously as sales volume for January 2018 is expected to be lower than the 54,729 units in December 2017 with the termination of year-end promotional events and recovery period from the floods.

Despite that, it said the 590,000 projection is line with the Malaysian Automotive Association’s current 2018 TIV target of 590,000 units.

Perodua maintained its leading position with 35.5% market share in 2017, even as sales dipped 1.1% lower at 204,900 units.

Kenanga Research is maintaining a “neutral” call on the automotive industry, which is also supported by the recent strengthening of the ringgit against US dollar and Japanese yen, leading to positive effects on automakers with gradual improvement in margin.

Bermaz Auto Bhd is the research house’s preferred pick for the automotive sector, considering its solid earnings recovery with the launch of its flagship model – the allnew Mazda CX-5, superior margins and steady dividend yield of 5% with its net cash position.