PETALING JAYA: Automotive companies could see a boost in sales in the third quarter of this year, spurred by the government’s tax exemption and introduction of new models.
MIDF Research in a report said it sees an inflection point in the third quarter of 2020.
“We now expect 2020 total industry volume (TIV) to contract by a narrower 8.3% year-on-year (y-o-y) compared with the previously expected 16.5% y-o-y contraction.”
Sector earnings, meanwhile, are expected to contract 31% y-o-y in 2020, narrower than the previously projected 50% contraction, said the research house.
“As a yardstick, when the three-monthtax-holiday was implemented in 2018, monthly TIV during the period rose by an average 32% y-o-y, or in absolute terms, a 21,000-unit per month increase against the pre-tax-holiday monthly TIV.
“In comparison, our revised 2020 projections imply a relatively conservative 7,800 units per month incremental TIV over the tax holiday period.”
Under the Short-Term Economic Recovery Plan announced by Prime Minister Tan Sri Muhyiddin Yassin in June, locally-assembled cars will be fully-exempted from sales tax while for imported cars, the sales tax will be cut from 10% to 5%, beginning next Monday to Dec 31.
MIDF Research said preliminary June sales volume is showing positive signs of improvement. Perodua’s June TIV almost tripled compared to the 7,886 units registered in May 2020, which had already marked a strong sequential rebound versus a weak April TIV (impacted by the movement control order).
“As a bellwether of the auto industry, we expect Perodua’s strong June performance to signal the trend for sector-wide June TIV to be announced later this month.”
Mirroring Perodua’s June performance, MIDF Research said channel checks with other industry players also indicated early signs of sales improvement after the tax-holiday announcement.
Kenanga Research in a report also said it expects a pick-up in vehicle sales during the third quarter of 2020.
“Some relief could arise from the tax exemption on passenger vehicles starting June 15, which could also improve third-quarter results to meet our expected 2020 TIV target units of 420,000 units.
“Another push could be from the upcoming new launches, including the Proton X50, Perodua D55L/Raizen, all-new Honda City 1.0 Turbo and all-new Nissan Almera 1.0 turbo. There are also streams of unannounced all-new launches pending pricing approvals which could lean towards completely-built-up models.”
According to the Malaysian Automotive Association (MAA), TIV fell 62% y-o-y in May from 60,760 units in the previous corresponding period, as generally people were still fearful of coming out and consumer sentiment remained cautious.
The MAA has also revised downwards its 2020 TIV forecast to 400,000 units from 607,000 previously. The 400,000 units forecast would represent a 34% contraction from 2019’s 604,287 units. It also marks the first time in 13 years since the TIV failed to surpass the 500,000-unit mark.
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