KUALA LUMPUR: July automotive sales are anticipated to remain strong, as bookings for new vehicles have remained steady post the expiry of the tax holiday.
While sales for the month are not expected to be as stellar as June, which was when the tax holiday ended, analysts said the strong July bookings still signalled solid sales momentum for the local automotive sector.
“Many auto companies are still reporting solid sales performances despite the expiry of the tax holiday. While bookings for July may not be as high as June, it’s still better than expected,” said an analyst.
Vehicle sales surged more than 100% year-on-year to 63,366 units in June 2022, mainly due to the low base effect as a result of the disruptions caused by the nationwide lockdown last year.
Another analyst said the strong sales momentum has been sustained by new model launches. “With the expiry of the tax holiday, car companies are more aggressive than ever to maintain their sales momentum, with many introducing new and exciting models,” he told StarBiz.MIDF Research analyst Hafriz Hezry said Perusahaan Otomobil Kedua Sdn Bhd (Perodua) managed to garner around 24,265 new bookings last month despite the expiry of the sales tax exemption in June.
“We gather that this is on top of the 243,000 outstanding bookings announced last month.
“The strong July bookings still signals steady sales momentum, which we think is partly driven by the recent launch of the new Alza and broadly, the pent-up demand amid a gradually improving labour market in line with the macroeconomic recovery,” he said in a recent research note.
Hafriz pointed out that the new Alza was launched on July 20 and has already received some 39,000 bookings, with an estimated 9,000 bookings collected in July.
He said this was significantly higher than the company’s monthly sales target of 3,000 units.
“While Perodua’s July total industry volume (TIV) is expected to be slightly weaker than June, given the residual chip supply issues, it is understood that the company is attempting to increase production to around 26,000 units per month in the second half of 2022 in order to shorten its waiting list.”
Hafriz noted that Perodua was producing an average of 21,700 units per month in the first half of 2022.
“Should this (production ramp-up) materialises, we see the possibilities of Perodua’s 2022 TIV outperforming even management’s bullish 247,800-unit sales target.
“As it stands, our 2022 Perodua TIV is 243,500 units, which is slightly more conservative than management’s target. Its January-to-July 2022 cumulative sales of 146,000 units accounts for 60% of our projection.”
Meanwhile, the month of July saw national carmaker Proton Holdings Bhd selling a total of 11,477 units across six models.
Its Proton X50 was the best-seller, hitting a monthly sales record of 4,763 units for July 2022 to be the best-selling vehicle in Malaysia and retaining the number one position in the sports-utility vehicle segment.
According to Proton, it was also the first time such a vehicle has led in overall sales.
Meanwhile, UMW Toyota Motor sold a total of 6,637 vehicles last month. It was, however, 2,302 units less than the 8,939 units delivered in June. However, year-to-date July sales were still nearly 50% higher than the same period last year.
The vehicle sales tax exemption was announced in June 2020, under the short-term economic recovery plan or Penjana.
Under the exemption, locally-assembled cars are fully exempted from the sales tax while for imported cars, the sales tax was reduced from 10% to 5%.
The tax holiday was supposed to end in December 2020 but was extended to June 30, 2021, and then again until the end of that year.
During the tabling of Budget 2022 in October last year, the government announced that the sales tax exemption would be extended one more time until June 30, 2022.
The multiple extensions were mainly due to the repeated lockdowns over the past two years, which disrupted business operations and prevented car buyers from being able to fully enjoy the benefits of the tax holiday.
Despite the discontinuation of the sales tax exemption, buyers who had booked their vehicles during the tax holiday period have until March 31, 2023 to register their vehicles with the Road Transport Department.
Kenanga Research said in a recent report it expects sustainable car sales post the tax holiday.
It believes that order cancellations would be minimal with demand outweighing supply, given the massive back-logged orders, coupled with the government’s commitment to absorb the sales tax for orders.