Saturday, June 19

Automotive sector sluggish as ‘wait and see’ approach lingers

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KUCHING: As shown by the latest figures from the Malaysia Automotive Association (MAA), the automotive industry’s total industry volume (TIV) growth continues to deteriorate as the market continues its ‘wait and see’ approach ahead of the yet to be scheduled latest National Automotive Policy (NAP) revision in hopes of lower vehicle prices.

The TIV for September had collapsed 11.5 per cent month-on-month (m-o-m) to 45,872 units despite the preceding month being a holiday-shortened month. It was also only 3.3 per cent higher year-on-year (y-o-y), a disappointing result considering that the Aidil Fitri festive holidays occurred in September last year.

Year-to-date (YTD), cumulative sales for the first nine months of the year reached 458,447 units, marginally up 1.8 per cent y-o-y. MAA expected sales in October to be similar to September.

RHB Research Institute Sdn Bhd (RHB Research) in a research note yesterday noted, “While national car sales remain constricted by the tighter lending guidelines, some consumers may have held back on their purchase decision ahead of the Budget 2013 announcement at end-September.

“While consumer reaction to the possibility of duty revisions in the new NAP is difficult to predict, we continue to believe that this is a significant risk for the market,” it said, adding that it had discussed the bulk of the implications in a previous report.

To recap, the research house on October 9 (after Budget 2013 in which no policy changes to the auto industry were announced) had stated that the domestic automotive industry was clearly in ‘dire need of a revamp’.

“Structural issues currently affecting the industry mean that domestic auto sales are near saturation point. The MAA’s long-term sales forecast assumes low single-digit market growth.

“These structural issues include high duty structure, high relative selling prices, non-tariff barriers, fuel subsidies and other political considerations,” it said in the earlier report.

The research house yesterday added that while its 2012 TIV forecast of 612,000 units was still achievable, much would depend on the extent of the sales and marketing promotions during the fourth quarter of 2012 (4Q12).

Assuming sales remained flat at an average of 45,000 units per month in the remaining quarter of the year, 2012 TIV would only reach 594,000 units, missing RHB Research’s TIV forecast of 612,000 units by nearly three per cent and down one per cent y-o-y.

Passenger vehicles’ sales declined by 11.9 per cent m-o-m but rose 1.5 per cent y-o-y to 40,232 units while sales of commercial vehicles declined by a lower 8.1 per cent m-o-m to 5,640 units.

In terms of marquee performance, Perodua sales grew by 5.4 per cent y-o-y given its aggressive marketing and promotion, according to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research).

Proton overall sales remained in the doldrums, down 3.6 per cent yoy as vehicle sales were hit by the tougher lending regime but the research house had gathered that Proton Preve sales were encouraging with 20,000 orders since its launch in April, with 11,000 to12,000 units delivered.

Toyota continued to lead the non-national marques segment at 17 per cent market share (with sales rising 2.5 per cent y-o-y) followed by Honda (up 9.9 per cent y-o-y).

Nissan sales dropped by 5.5 per cent y-o-y, said to due to the absence of new launches as the B-segment Nissan Almera was scheduled to be released on October 30, with a sales target of 1,000 units per month.

“The annualised nine-month YTD estimated vehicle sales of 458,447 units are largely in line with both our full-year TIV forecast of 611,140 units and MAA’s forecast of 615,000 units.

“Thus, we are making no change to our TIV forecast for now, as we continue to expect vehicle sales to slow down due to the aversion to year-end deliveries among prospective buyers and anticipation of the upcoming revision to the NAP,” MIDF Research remarked.

RHB Research expected competition in the market to be “particularly fierce in 4Q12 with aggressive promotions as distributors fight to meet their 2012 sales targets with negative implications for margins.”

“We remain wary on the caution displayed by consumers and the implications for industry sales in the months ahead,” the research house summarised.