Automotive TIV to be sustained in second half
KUCHING: Total industry volume in the second half of the year (2H21) will continue to be supported by a sustained strong performance of national marques Proton and Perodua due to their more attractive pricings and value propositions for their products in the domestic auto market.
This comes as AmInvestment Bank Bhd (AmInvestment Bank) expect the auto sector to resume operations (on the assembly, manufacturing and reopening of showrooms) in either July or August 2021 as the nation gradually moves from phase 1 of the latest movement control order (MCO 3.0).
“Based on our understanding of the National Recovery Plan, the auto sector should be able to operate business as usual in phase 2.
“We note that the government is also ramping up vaccination efforts to achieve herd immunity (an inoculation of 80 per cent of the Malaysian population) by December 2021. Efforts are undertaken to increase the number of vaccine doses administered daily to 200,000 in July and 300,000 in August.
“With the acceleration of the vaccination drive and gradual easing of the MCO by phases, we anticipate consumer spending (on big-ticket items such as passenger vehicles) to remain robust in 2H2021 with sentiment gradually improving.”
The Sales and Services Tax (SST) exemption of 100 per cent and 50 per cent sales tax exemption on locally assembled (completely knocked down (CKD)) and fully imported (completely built up (CBU)) car models respectively – has been extended till December 31, 2021.
AmInvestment Bank believe this would continue to spur vehicle sales till the end of the year.
“We project TIV of 50,000 to 60,000 units per month postlockdown, with the bulk of market share to be tilted in favour of national car brands. We anticipate TIV sales volume in 4Q21 to be stronger,” it said.
“We believe that the worst is over, and that there will be gradual easing of restrictions globally, alongside global vaccination programmes, which will improve businesses’ cash flows and reduce the disruptions to supply chains.”
The production of vehicles in the domestic auto market will also be normalised with the gradual easing in the shortage of chips seen recently — especially with Perodua’s Myvi.
From its channel checks, AmInvestment Bank gathered that Perodua is trying to find substitutes to its supply chain via sourcing of different suppliers.
The auto sector will still be led by both national automakers as Proton and Perodua’s fleet of vehicles are priced attractively with superior value propositions compared to the mid-tier nonnational brands such as Toyota, Nissan and Honda.
“The Perodua Ativa, Aruz, Proton X70 and X50 SUVs are not only more attractively priced compared to its peers, these models also provide more interior technological features for a superior driving experience. The X50 is the first car in the domestic market with Level 2 automation.
“Thus, we are expecting a strong finish to the year as auto players usually offer additional promotional discounts or cash rebates for year-end clearance and the festive season in 4Q21.
“Also, consumers would want to lock in their purchases to enjoy the reduction in car prices from the SST exemption which will end by December 31, 2021.”
Last year, December 2020 TIV shot through the roof with a total sales volume of 68,800 units, reaching a 60-month high. AmInvestment Bank expect a similar trend before the end of SST exemption this year.