The total industry volume (TIV) in April charted a YoY growth of 10% to 52,489 units. As expected, MoM, the sales slid by 9% likely due to the wait-and-see approach adopted by consumers from the uncertainty  surrounding the recent general election. YTD, the 4MCY13 TIV grew 13% YoY to 210,153 units, making up 33% of both ours and the Malaysian Automotive Association’s (MAA) 2013 forecasts of 641,560 and 640,000 units respectively. Meanwhile, the YTD TIP registered a slight growth of 5% to 196,778 units. YoY, the main marques, except for Toyota, recorded an increase in passenger vehicle sales in April. Toyota’s sales slid 34% to 4,132 units. Likewise, its commercial units did poorly with sales of 2,485, a drop of 14% YoY and 18% MoM.  We look forward to the unveiling of the revised National Automotive Policy (NAP) (expected in 2H13), which will focus on positioning the country as a regional hub for hybrid vehicles and energy-efficient vehicles (EEV) as well as the gradual removal of high duties, high selling prices, non-tariff barriers, and fuel subsidies. Maintain Neutral. 

Sales slowed MoM. Total vehicle sales (TIV) in April charted a YoY growth of 10% to 52,489 units where sales of passenger vehicles increased by 10% to 45,564 units while commercial vehicles posted increased sales of 9% YoY to 6,925  units. However, the uncertainty of the outcome of the recent general election led consumers to adopt a wait-and-see approach, which resulted in sales slowing down MoM. Compared  to March, the total sales in April dropped by 9%, with sales of passenger vehicles declining by 10% and commercial vehicles by 2%. YTD, the 4MCY13 TIV grew 13% YoY to 210,153 units, making up 33% of both ours and the Malaysian Automotive Association’s (MAA) 2013 forecasts of 641,560 and 640,000 units, respectively.     

Production was higher YoY. April’s total industry production (TIP) rose 13% YoY and 4% MoM to 50,727 units. Production volume for passenger vehicles was up 16% YoY to 45,770 units (3% MoM), while total commercial vehicles produced in April slid by 5% YoY (7% MoM). YTD TIP registered a slight growth of 5% to 196,778 units.   

Sales analysis. YoY, the main marques, except for Toyota, recorded an increase in passenger vehicle sales in April. Toyota’s sales slid 34% to 4,132 units, whereas Nissan and Honda’s sales jumped 79% and 49% to 3,251 and 3,224 respectively likely due to the overwhelming sales of the Nissan Almera and Honda’s fourth generation CR-V. On a MoM basis, sales were lower for the main auto companies with the exception of Perodua. Perodua registered a 9% sales growth of 17,675 vehicle units. In contrast, Proton’s vehicle sales fell 11% to 10,581 units. Meanwhile, sales for the commercial units generally improved YoY and MoM. Mitsubishi sold a total of 789 units, an improvement 36% YoY and 26% MoM. Similarly, Nissan’s sales in April grew by 11% YoY and 9% MoM to 728 units. However, Toyota’s commercial units did poorly in the month with sales of 2,485, a drop of 14% YoY and 18% MoM.   

Outlook. According to the MAA, May’s sales are expected to be maintained at April’s level. We look forward to the unveiling of the revised National Automotive Policy (NAP) (expected in 2H13), which will focus on positioning the country as a regional hub for hybrid vehicles and energy-efficient vehicles (EEV). This would include measures and incentives to promote the growth of EEV. It was reported that the new policy would also look into gradually eliminating the structural issues such as high duties, high selling prices, non-tariff barriers, fuel subsidies and other political considerations. The revised NAP should be positive for all the auto players, especially DRB-Hicom (MP, TP: RM2.70) and UMW Holdings (MP, TP: RM14.00) as both will benefit from their partnerships and affiliations with foreign car makers, which can be developed into further tie-ups and collaborations.

Neutral on the sector. We maintain our Neutral stance on the auto sector and retain our 2013 TIV forecast of 641,560 units (2.2% growth). Our top pick for the sector is TCHONG (OP, TP: RM7.50).

Source: Kenanga