Lower TIV in January

According to Malaysian Automotive Association (MAA), the monthly Total Industry Volume (TIV) in January plunged 16.5% MoM as delivery of vehicles normalised after the ramp-up in Dec-23 to fulfil backlog orders, as well as increased Dec-23’s sales as a result of year-end bargains. However, on a YoY basis, it increased by 30.6% YoY to 64.5k units, mainly due to a low base in January 2023.

Expect TIV to be Lower in Feb

The passenger vehicle segment decreased by 16.2% MoM to 59.4k units, while the commercial car segment also dropped by 18.5% MoM to 6.1k units (refer to Figure 1). We expect TIV to be lower in February, attributable to seasonal factors such as shorter working month due to the Chinese New Year festive holidays.

Most Major Car Brands Registered Lower Passenger Vehicle Sales

All major car brands registered lower passenger vehicle sales on a MoM basis, except: 1) Proton, which the sales volume increased by 5.6% MoM to 12.8k units, and 2) Nissan (+4.2% MoM). Proton Saga is the best-selling car model for Proton with 6.1k units, followed by X50 at 2.0k units and Persona at 1.8k units. Meanwhile, Perodua registered a lower sales volume of 29.7k units in Jan (-4.9% MoM). The combined market share of national cars increased to 71.5% in January compared with 61.1% in Dec 2023.

Maintain Neutral

We reiterate our Neutral recommendation for the sector. After another record-breaking year in 2023, we expect the automotive sector to normalise in 2024 and register a weaker TIV of 650k units (-18.7% YoY) due to the absence of tax incentives and depleting order book. Meanwhile, the potential high-value goods tax (HVGT) is expected also post some downside risk to the sector. Maintained SELL on MBMR (TP: RM4.13) and BAuto (TP: RM2.33) while SIME (TP: RM2.84) remained as BUY.

Source: TA Research - 26 Feb 2024