KUCHING: Malaysia’s automotive sector faced subdued numbers in April on gloomy demand, with analysts attributing the decline in total industry volume (TIV) to the implementation of a new tax regime.
According to the Malaysian Automotive Association’s (MAA), April TIV declined 23 per cent year on year (y-o-y) and 32.9 per cent month on month (m-o-m) to 45,187 units while the first four months of 2015 (4M15) dipped 2.4 per cent y-o-y to 213,493 units.
According to the research arm of Affin Hwang Investment Bank Bhd (AffinHwang Research), it was not surprised by the slump in sales m-o-m as March was an uncharacteristic month as consumers brought forward their big-ticket item purchases (ie, cars) before the implementation of the goods and service tax (GST).
On the other hand, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) attributed the decline in TIV figures to the implementation of a new tax regime in April 2015.
Although the replacement of the Sales and Service Tax (SST) with GST led to lower price levels across the board, MIDF Research believed that consumer confidence was hit by uncertainties arising from the new consumption tax putting a break on their spending on big ticket items.
“As such, falling car prices were unable to soften the reduction in TIV volume,” it said.
While the research arm noted a potential one to three per cent reduction in price levels for most automakers, an appreciation of the yen against ringgit may cause imported auto parts to be more expensive thus offsetting any savings made from weaker prices for completely built up (CBU) vehicles.
For 4MCY15, MIDF Research noted that Toyota was the worst performer followed by Proton.
It further noted that sales for Toyota over the period weakened 33.2 per cent to 22,000 units (from 33,000 units) while Proton’s sales volume went down by 23.8 per cent to 32,000 units.
Meanwhile, the research arm said that total industry production (TIP) grew +7.1 per cent to 225,331 units for 4MCY15 as automakers replenish their inventories following a stock clearance exercise in the period building up to GST implementation.
“We may also pin the higher output numbers for April on automakers’ expectations of stronger demand in subsequent months as consumers adjust to the new post-GST price levels,” it said.
As Toyota and Proton continued a disappointing string of results, MIDF Research noted that impacts were fairly softened by growth in sales for Perodua, Honda, Nissan and Mazda, with each registering growth rates of +21.4 per cent, +27.3 per cent, +5 per cent and +18.6 per cent respectively.
The research arm further noted that while Perodua maintained its lion’s share of the nationals market at 35 per cent, Honda retained its leadership of the non-nationals segment at 13 per cent for 4MCY15.
“In view of Perodua posting 21.4 per cent to 74,000 units for the year-to-April period, market share for TIV went back to the national makes which cornered 50.3 per cent market share relative to non-national makes’ at 49.7 per cent.
“Weaker contributions from Toyota led to national cars attaining a marginal edge over non-national cars,” it said.
Within the non-national segment, the research arm noted that Honda maintained its lead ahead of the pack, garnering 13 per cent of the market in the first four months of the year with Toyota, Nissan and Mazda coming in at 10 per cent, eight per cent and two per cent respectively.
MIDF Research maintained its TIV growth target of +0.5 per cent to 670,000 units for 2015.
The research arm anticipated market to normalize in light of higher living costs and uncertain economic conditions which may adversely affect consumer confidence on big ticket items, thus offsetting any gains made from lower price levels.