Lower TIV in June

The Malaysian Automotive Association (MAA) reported a MoM decline of 17.2% in total industry volume (TIV), reaching 58.0k vehicles in June 2024. This was the lowest TIV recorded so far this year. YoY, TIV also experienced a decrease of 7.3%. YTD, TIV reached 390.3k units, showing a 6.6% increase from the previous year. The growth was primarily driven by strong performance in the passenger car segment, which grew 9.2% to 356.9k units. In contrast, the commercial vehicle segment declined to 33.4k units, a decrease of 15.3% YoY.

Perodua Lead the National Marques Growth +9.6% YoY

YTD, Perodua achieved a substantial sales growth of 17.4%, reaching 169.8k units, while Proton experienced a slight decline in sales volume, down 5.2% YoY to 61.4k units. The combined market share of national car brands remained flattish at 67.8% compared with 67.6% in 1H 2023.

Honda Crowned the Non-National Car Segment

The non-national car segment saw an 8.4% year-on-year increase, totalling 114.9k units. However, all major brands reported lower sales in the first half of 2024, except for Honda. YTD, Honda experienced a 16.3% growth, reaching 39.2k units, supported by the launch of new models and facelifts. Other major non-national brands faced varying degrees of decline in sales, ranging from 1.4% to 46.9%. In terms of passenger market share, Honda led with 11.0%, followed by Toyota at 9.3% and Mazda at 2.3%.

22.5k Units of XEV Sold in 1H 2024

According to MAA, the xEV sales (Hybrid Vehicles (HV) and Electric Vehicles (EV)) registered a sales volume of 22.5k units (comprising HV: 15.8k, EV: 6.6k) in 1H 2024. The sales of EVs saw a remarkable increase of 112% compared to the 1H of 2023. It is important to note that these figures exclude Tesla and some smaller EV manufacturers, as they are not members of the MAA. However, according to the Road Transport Department Malaysia (JPJ), approximately 10.7k EVs were registered in Malaysia in 1H 2024, reflecting a YoY growth of 141.8%. Additionally, about 3.1k Tesla vehicles were registered during the same period, highlighting the rising adoption of EVs among consumers.

With new brands entering the market and existing players expanding their offerings in the 2H of 2024, we anticipate increasing competition in the local EV market. This growth is expected to bring higher sales volumes of EV, giving consumers greater access and wider choices. Meanwhile, we gathered that as of June 25, a total of 2,585 EV chargers have been installed across the country, which is still significantly short of the government's goal to have 10k EV charging stations by 2025.

Car Sales May be Impacted by E-invoicing Compliance in Malaysia

We see potential car sales to be impacted by the e-invoicing implementation in Malaysia starting 1 Aug 2024, as buyers may struggle to obtain the "full loan" provided by certain sales agents who inflate invoices with additional charges. The Inland Revenue Board of Malaysia (IRBM) states that an e-invoice is a digital version of a transaction between a supplier and a buyer, replacing traditional documents like invoices, credit notes, and debit notes. Since all invoices must be submitted directly to the IRBM via the e-invoice portal, sales agents won’t be able to easily markup invoices, as all figures must match across documents. E-invoicing will initially apply to taxpayers with annual revenues over RM100mn, expanding to those with revenues between RM25mn and RM100mn on 1 Jan 2025. It will be mandatory for all taxpayers by 1 July 2025.

Maintain Neutral

We maintain our NEUTRAL recommendation for the sector. Despite the introduction of new models, facelift versions, and new variants, forthcoming car sales might be influenced by declining consumer sentiment amid the implementation of the targeted fuel subsidy scheme. Our 2024 TIV forecast remains at 700k units (-12.5% YoY).

We have now incorporated our proprietary Environmental, Social, and Governance (ESG) scoring system into our stock valuations to align investment decisions with broader considerations of sustainability, corporate responsibility, ethical practices, and environmental impact. We have applied a 3% premium to BAuto (TP: RM2.74), and SIME (TP: RM2.85), based on their 4-star ESG ratings (★★★★). Meanwhile, the target price for MBMR (TP: RM4.70) has been maintained, reflecting its 3-star ESG ratings (★★★).

Source: TA Research - 19 Jul 2024