AUTO companies will face a tougher 2009 with analysts predicting total industry volume (TIV) sales to drop by as much as over 20% on a prolonged economic downturn. However, the industry may be able to ride it out due to stronger balance sheet and healthier cashflows.
Aseambankers Malaysia Bhd research head Vincent Khoo says industry trough valuations would not be as depressed this time around as partial stress tests on inventory days, interest cover ratio and cash financials reveal that auto companies are in a better shape to compared to 10 years ago during the Asian financial crisis.
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