PETALING JAYA: Total vehicle sales is expected to remain steady for the first half of 2021, driven by the ongoing tax holiday and various promotional campaigns by car companies.
Higher loan approval rates for passenger cars is also set to bode well for this year’s total industry volume (TIV).
With the outlook looking better than last year, volume-driven models, such as the Perodua Ativa, Proton X50, Honda City and Nissan Almera, are set to benefit the most.
Kenanga Research, in a report yesterday, said it is targeting TIV to grow 11% year-on-year to 585,000 units in 2021.
“Overall, 2021 could potentially be a better year, along with better incentive programmes under the National Automotive Policy 2020, positive impact from Bank Negara’s overnight policy rate cut and pre-emptive measures that will soften the Covid-19 impact.
“Our economics research team is of the view that an expected global growth recovery and the impact of the large fiscal stimulus on the domestic economy would result in a projected gross domestic product growth rebound of 4.5% in 2021.”
The research house added that the approval rate for loans on passenger cars stood at 60.8% in January, an increase of 6% from December 2020 and the higher than the average 54.8% in 2020.
Meanwhile, AmInvestment Bank is maintaining its “overweight” stance on the local auto sector with an unchanged TIV projection of 575,000 units for 2021.
“We expect the strong sales volume momentum to sustain throughout the first half of 2021, bolstered by the extension of the sales tax exemption exemption from Jan 1 until June 30.
“We believe the tax exemption will continue to spur interests in passenger vehicles, especially Proton and Perodua.”
Under the vehicle sales tax exemption, locally-assembled cars are exempted from sales tax while for imported cars, the sales tax will be cut from 10% to 5%.
Total vehicle sales rose 4% year-on-year to 42,784 units in February, spurred by increased traffic volumes to showrooms during the month following the lifting of the movement control order (MCO) in certain states.
According to data by the Malaysian Automotive Association (MAA), sales volume in February was 30% higher month-on-month compared with January.
Year-to-date February 2021, total vehicle sales stood at 75,613 units compared with 84,030 units in the previous corresponding period.
AmInvestment Bank expected March 2021 TIV to be higher month-on-month compared with February, supported by the resumption of the Road Transport Department’s full services for all types of vehicle transactions.
At its first bi-annual meeting in January, the MAA said TIV had hit 529,434 units in 2020. This was, however, 12% lower than the 604,281 units achieved in 2019.
The drop in TIV can be attributed to the disruptions to businesses as a result of the first MCO that was implemented in March last year to curb the spike in Covid-19 infections.
For now, it is unclear if the tax exemption will be extended once more until the end of the year.
While some believe that vehicle sales could slow down if the exemption is not extended.
Others reckoned that new vehicle launches and aggressive promotional campaigns would continue to spur buying interest.
For this year, the MAA projected TIV to grow 8% to 570,000, on the back of the renewed sales tax exemption and stronger economic recovery.