NAP 2020: Little impact on traditional auto sector seen

PETALING JAYA: The National Automotive Policy 2020 (NAP 2020) is unlikely to have an impact on the traditional automotive industry over the near to medium term, Affin Hwang Capital Research said in a note.

“We think the forward looking policies will unlikely impact the traditional automotive sector over the near-medium term.

“While we are positive on the framework, near term we think that the NAP 2020’s 2030 targets are ambitious, considering the stiff competitive landscape among carmakers and slackening demand in the automotive industry,” it said.

Launched last Friday, the NAP 2020 is an enhancement of NAP 2014, aimed to nurture Malaysia towards becoming a regional automotive champion.

It also introduced three new elements, namely Next Generation Vehicles (NxGV), Mobility as a Service (MaaS) and Industrial Revolution 4.0.

In addition, the 10-year policy has broadly outlined three directions and three strategies to bring these three elements into fruition.

The blueprint, however, did not unveil new incentives or policies on taxes and duties.

Instead, incentives as well as taxes and duties will continue to be deliberated by the Automotive Business Development Committee before being approved by the Finance Ministry.

Affin Hwang is maintaining its “neutral” call on the sector, with its top pick being MBM Resources Bhd.

Meanwhile, AmInvestment Research said it believes it will take some time before the initiatives slated would come to fruition.

“We commend the government’s efforts to further grow the local automotive sector in the long term as it is an integral part of the Malaysian economy, but until we get more clarity and information about the initiatives and policies mentioned in the NAP 2020, we make no changes to our stock calls and sector recommendations as it is a long-term plan with no immediate impact to the auto sector,” it said.

The research house is reiterating its “buy” calls on MBM Resources and Pecca Group Bhd as higher customised incentives would lower the prices of majority of Perodua vehicles will consequently increase the demand for its EEV-compliant cars.

It also said it is maintaining its “neutral” stance on the sector with a total industry volume projection of 610,000 units for 2020.

“We continue to be optimistic on the national car marques Proton and Perodua for 2020, while we stay cautious on the foreign and premium car brands as consumers are more careful and conservative with their discretionary spending, indirectly benefiting the cheaper and better value-for-money vehicles,” it said.

On the proposed new national vehicle project, AmResearch said it believes the national car is likely to be a B-plus or a Csegment sedan, which has yet to be named.

However, should it be a C-segment vehicle, it may not be priced for the mass market, but instead will be targeted at a niche consumer market.