Analysts: Autos to see recovery in June
Things are looking up for the automotive sector as May 2020 registered sales of 22,960 units, leading analysts to envisage a rise in car sales in June on the back of various incentives such as lower car prices and sales tax exemptions.
The TIV numbers reflected half-month vehicles collection sales which started on May 13, 2020, being the first day of Jabatan Pengangkutan Jalan (JPJ) resuming operation with the relaxation of MCO guidelines.
Note that April 2020 sales units registered were only a statistic from JPJ e-Da ar system, with no actual delivery due to the movement control order (MCO).
Taking a detailed look at the passenger vehicles segment, Kenanga Investment Bank Bhd (Kenanga Research) saw that both monthly and yearly performances tracked the overall unit sales trend on the abovementioned reasons.
“Perodua was cushioned by its best-selling face-li ed Bezza, which was launched in earlyJanuary 2020, and supported by Perodua Aruz,” it said. “Meanwhile, Proton sales were boosted by the all-new X70 CKD, and supported by the face-li ed Proton Saga, Iriz, and Persona.
“For international marquees, Honda sales mostly came from its top models of Honda City, Civic and BR-V. Toyota’s sales growth was contributed by the all-new Toyota Vios, all-new Toyota Yaris, and Toyota Hilux, which comprised 77 per cent of UMW Toyota sales.
“Mazda showed increased delivery for face-li ed CX-5 and all-new CX-8. On the other hand, Nissan fared the worst due to dearth of all-new model launches.”
On this positive uptrend, Kenanga Research expected sales volume for June to be higher than May with a full month business operation, coupled with the announcement of sales tax exemption by the government which correspondingly increased showroom traffic.
“Nonetheless, overall numbers would still be lower than the traditional monthly registration prior to MCO, given social distancing resulting in long queues at Puspakom and JPJ, cautious consumer spending on high-value discretionary items, and stringent loan approvals, in our view.
The quantum of vehicles price reduction under sales tax exemption are Perodua average price lower by three to six per cent, Proton by one to six per cent, Honda by three to five per cent, Toyota by one to five per cent, Mazda by two to four per cent and Nissan by one to six per cent.
“We maintain underweight on the sector with 2020 TIV target units of 420,000. We believe that national marques would fare worse than non-national marques as their target markets of lower to mid-income range is the most financially distressed segment.
“Furthermore, the planned new launches for 2HCY20 could be delayed given the weak consumer sentiment, but some reliefs could arise from sales tax exemption until end-of the year, be er incentives program under NAP 2020, and positive impact from the overnight policy rate cut and pre-emptive measures to assist those who might be financially challenged by Covid19 impact.
“Our economic research team is of the view that the MCO to contain the outbreak will adversely impact the economy in the short term with 2020 GDP expected to contract by 2.9 per cent. Going forward, the final impact would depend on the outcome of containment measures and economic stimulus by the government.”
With the price adjustments made by the respective carmakers, Affin Hwang Investment Bank Bhd (AffinHwang Capital) said Malaysians can now take advantage of a cheaper ride, following the sales tax incentive announced in the government’s PENJANA economic recovery plan.
“Besides relying on the tax incentive, we learnt that carmakers have also been encouraged by the government to dole out additional incentives (ie, added discounts, cashbacks, exclusive gi s, additional warranties, etc) to lure customers,” it said in its own notes.
“As for new model launches, we sensed a mixed reaction among the carmakers, whereby some launches are still on track to be unveiled in 2H20, while others may be deferred to next year.
“Notably, many automakers have yet to revise their 2020 sales targets; and we think they may need to go back to the drawing board to realign strategies and production schedules with their respective principals and vendors.
“We acknowledge that there is also uncertainty over how Malaysians would behave as we exit the MCO, given the imminent wage cuts and higher unemployment rates.”
AffinHwang Capital thus maintained its neutral rating on the auto sector.