The MAI said this at Affin Hwang Capital Research's Auto Day, which saw the participation of the Ministry of International Trade & Industry, MAI, the Malaysia AUtomotive Association (MAA) and four auto players.
"In our view, the tougher restrictions could potentially only target the reconditioned (recon) car market rather than the locally listed foreign carmakers, as we do not expect the government’s new policy to negatively impact local assembly operations, which could then also have a detrimental impact on the entire automotive ecosystem," said Affin Hwang in its Friday report.
It added that MAA revised its 2018 total industry sales volume (TIV) forecast down to 585,000 units from 590,000 units previously as it expects a short-term dip in demand post implementation of the sales and service tax (SST) in September.
"Sales should pick up again by year-end due to the usual festive promotional activities," it said.
However, MAA also believes other issues such as the highly saturated local auto market, lack of economies of scale and high excise duties remain dampenders to domestic auto growth.
The four industry players that attended Affin Hwang's event were Sime Darby, UMW Holdings, Bermaz Auto and Pecca Group, which were positive over the boost from the three-month tax holiday.
Affin Hwang noted that Sime believes the SST sticker price will not deter premium car purchases while Bermaz Auto remains bullish car demand, being the only auto player that will absorb SST for booking made before Sept 1.
Meanwhile UMW expects to see a better 2018 due to its healthy product pipeline and extensive product offerings from Komatsu while Pecca will continue to rise on the sustained growth in Perodua car sales.
Affin Hwang maintained its overweight stance on the auto sector as it expects a recovery of the TIV and improvement in companies' profit margins.