TIV Rebounded in March

According to the Malaysian Automotive Association (MAA), the monthly Total Industry Volume (TIV) rebounded in March, spurred by Hari Raya promotional campaigns and the rush for deliveries from companies with FYE closing on 31 March 2024. TIV increased by 10.5% MoM but was down by 9.9% YoY, reaching 71.1k units in March. The passenger vehicle segment increased by 9.0% MoM to 64.8k units, while the commercial car segment also improved by 29.6% MoM to 6.3k units (refer to Figure 1). However, on a YoY basis, both segments decreased by 8.7% and 20.8%, respectively. YTD, the TIV stood at 202.2k units (+5.0% YoY) driven by sales in the passenger car segment of 185.0k units (+7.6% YoY), which offset the decline in the commercial vehicle segment to 17.3k units (-16.5% YoY). Going forward, MAA expects the TIV to be lower in April following the short working month in conjunction with the Hari Raya festival.

National Car Marques Had Mixed Results

Perodua registered higher sales volume of 28.9k units (+5.8% MoM) in March, while Proton registered a lower volume of 12.4k units (-6.1% MoM). Both marques recorded lower sales volumes on a year-on-year (YoY) basis. YTD, Perodua saw a growth of 9.3% YoY to 85.9k units, while Proton experienced a decline of 3.5% to 38.5k units. The combined market share of national cars has slightly dropped to 67.2% compared to 68.9% in the same period last year for the total passenger market.

Non-National Car Sales Improved

All non-national car brands registered stronger improvements in March, with Volkswagen increasing the most by 52.9% MoM to 156 units, followed by Honda at 8.3k units (+33.2% MoM), Toyota at 6.9k units (+27.4% MoM), and Nissan at 576 units (+19.8% MoM). Mazda was the only decliner with weaker sales of 1.6k units (-8.6% MoM). Cumulatively, Honda was the only brand that recorded higher sales of 21.6k units (+23.2% YoY), while the rest experienced contraction ranging from 1% to 49%. (Refer to Figure 2).

11k Units of XEV Sold in 1Q

The xEV sales (Hybrid Vehicles (HV) and Electric Vehicles (EV)) registered a sales volume of 11K (comprising HV: 8.3k, EV: 2.7k) in 1Q 2024. This is considered a good start to the year as it represents almost one-third of the total xEV sales in 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 a depleting order book. Maintained SELL on MBMR (TP: RM4.13) and BAuto (TP: RM2.33). We have put SIME (TP: RM2.84)’s recommendation and TP under review pending the release of its 3QFY24 financial results. We expect SIME’s Industrial division to continue reporting good performance, supported by a robust order book and strong demand from the mining sector in Australia. Nevertheless, this growth could be offset by intense competition in China’s automotive industry, leading to eroding margins.

Source: TA Research - 26 Apr 2024