Global chip shortage for autos likely to improve in 2H21
KUCHING: The global chip shortage situation in the automotive sector will likely improve in the second half of 2021 (2H21) as original equipment manufacturers (OEM) seek alternative suppliers to meet the current demand.
Of note, global chip shortage has caused disruption to the supply chain of the automotive sector since earlier part of the year
According to the research team at Hong Leong Investment Bank Bhd (HLIB Research), OEMs are in talks with principals and various suppliers to secure enough inventories to fulfil the strong demand during sales and service tax (SST) exemption period. Hence, it expected the situation to improve in 2H21.
Meanwhile, it believed that the SST exemption is expected to balance off the impact of the full movement control order (FMCO).
It noted that June is expected to record close to zero total industry volume (TIV) due to implementation of FMCO.
“On the brighter side, we expect a rebound in TIV in 2H21 following the newly extended SST exemptions on new passenger cars to December 31 (from June 30).
“Consumers are expected to continue to take advantage of the lower new car prices, which have reduced by two to seven per cent (according to paultan.org).
“In addition, attractive new model launches by OEMs in since end-2020 will continue to grab higher market share,” it opined.
It noted that OEMs with exciting new models include Proton (DRB) – X50, Perodua (UMW & MBM) – Ativa, Honda (DRB) – City, Toyota (UMW) – Vios, Yaris and Corolla Cross, Nissan (TCM) – Almera & Navara facelift, and Mitsubishi (DRB) – Xpander.
For now, it maintained its TIV forecast for 2021 at 584,000 units, up 10.6 per cent year-on-year (y-o-y).
Aside from that, HLIB Research expect the ringgit-dollar exchange average 4.10 in 2H21 (compared with June’s 4.13, 4.10 in 1H21 and 4.20 in 2020), while the ringgityen exchange could average 3,730 (according to Bloomberg) in 2H21 (compared with 3,805 in 1H21 and 3,936 in 2020).
“Strengthened ringgit will reduce the effective input costs for imported completely built up (CBU) cars, completely knocked down (CKD) packs and raw materials, and subsequently improving OEMs’ margins.”