Muted impact from new launches for local auto sector

KUCHING: MAA released the sales (TIV) and production (TIP) figures for October on Thursday with TIV rebounded 13.4 per cent mom to 54,187 units after it dipped below 50,000 in September.

MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) noted that TIV declined 1.6 per cent year on year (y-o-y) from over 55,000 in October 2013 mainly due to slower sales of commercial vehicle which fell by 505 units to 6,643 units while passenger vehicles declined marginally by 0.8 per cent y-o-y or 386 units to 47,544 units.

The first ten months of 2014 (10M14) TIV figure stood at 546,492 units, growing marginally by 0.6 per cent y-o-y. The considerable slowdown in TIV growth from as high as 6.3 per cent in 1H14 was due to a high base effect in second half 2013 (2H13) due to a pent up demand postGE13 in May 2013 said MIDF Research.

The tighter lending guidelines could have also contributed to the slower growth. Despite TIV rebounding strongly, the research house noted that the TIP figure dropped 7.5 per cent mom to 45,763 units.

“We believe this could be due to inventory buildup in September (TIP in September stood at 49,479 units) which led to a lower October output.

“The softer TIV (vs October 2013) was largely unexpected given two key model launches in September. On closer look, the disappointment was mainly with Proton’s TIV which remained weak at only 8,130 units. This is a marginal growth of one per cent against September’s 8,053 units and a sharp 37.2 per cent y-o-y drop from close to 13,000 units in October 2013.

“Contrastingly, Perodua’s sales rebounded to over 17,000 units – a typical strong month for Perodua – following the Perodua Axia’s debut,” it said.

Consequently, the non-national makes continued to dominate the market with 52.4 per cent share of the market. The best performer amongst the non-national segment was Honda which recorded 59 per cent y-o-y growth or over 2,300 units to 6,188 units. Meanwhile, Nissan’s sales continued to strengthen, led by its passenger car models.

The 10 month TIV of 546,492 units constituted 82 per cent of our 2014 TIV target of 668,000 units and 80 per cent of the Malaysia Automotive Association (MAA)’s 680,000 unit year end target. In order for MIDF Research’s target to be met, TIV for the last two months of 2014 would need to grow 7.8 per cent y-o-y, averaging at over 60,000 units per month, which is quite steep.

It added that the October TIV rebounded by 13.4 per cent mom but declined 1.6 per cent y-o-y to 54,187 units despite the recent launchings of two high volume models by both national carmakers.

The weak TIV figure was unexpected and this was mainly due to Proton’s prevalent weak sales. Despite the Proton Iriz’s debut, Proton’s TIV declined 37.2 per cent y-o-y to 8,130 and improved marginally by one per cent y-o-y from September’s figure.

“We believe the slow sales was possibly due Iriz’s sales being offset by declining sales from its aging model lineup, as well as longer duration for HP approvals as a result of the tighter lending guidelines.”

On the other hand, Perodua’s TIV rebounded to 17,683 units – considered a strong monthly sales figure – to record a 46 per cent m-o-m growth and 13.8 per cent y-o-y growth. The research house believe the softening in TIV was possibly due to the longer duration for hire purchase loans to be approved given the tighter lending guidelines in place.

The non-national makes continue to dominate the market with 53 per cent year to date TIV market share. The declining market share for national brands is largely due to Proton’s persistently weak sales while Perodua’s running down of Viva’s sales also contributed to the market share decline of national makes.

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