PETALING JAYA: The automotive sector’s total industry volume (TIV) is expected to normalise in the second half of 2024, given anticipation of weaker consumer sentiment amid the government’s subsidy rationalisation measures, says BIMB Securities Research.
Furthermore, the implementation of e-invoicing by the Inland Revenue Board could also reduce vehicle sales.
This is as consumers may not be able to secure full loans for their vehicle purchases, the brokerage firm said in a recent report.
Starting Aug 1, e-invoicing will be imposed on taxpayers with an annual revenue of over RM100mil.
A similar regulation will also be imposed on taxpayers with an annual revenue of over RM25mil on Jan 1, 2025.
It will be made mandatory for all by July 1, 2025.
According to BIMB Securities, its “neutral” recommendation on the sector remains unchanged primarily due to the anticipated normalisation in TIV this year.
“The key risks to our sector recommendation are a stronger labour participation rate and the impending higher salaries for civil servants, which have the potential to sustain buying interest in car ownership,” it added.
At this juncture, the brokerage firm has a “buy” call on Bermaz Auto Bhd
at a target price (TP) of RM2.80 a share and Sime Darby Bhd (TP: RM3) and a “sell” call on MBM Resources Bhd (TP: RM4.28).
Meanwhile, the Malaysian Automotive Association or MAA has revised its TIV target to 765,000 from 740,000 previously.
“Accordingly, we revised upward our forecast 2024 TIV to 710,000 (1H24: 390,000 and 2H24: 320,000) from 650,000, with a monthly average TIV of 53,200,” said BIMB Securities.
This is after taking into account the stronger-than-expected actual 1H24 TIV.
Despite the higher 2024 TIV estimates, the brokerage firm, however, has still projected a 12% year-on-year (y-o-y) decline in TIV in 2024 against 799,000 TIV in 2023.
“Our lower y-o-y TIV projection in 2024 is based on the postponement of the new Perodua model launch to 2025, and a reduction in consumer confidence amid the implementation of subsidy rationalisation measures,” it noted.
In June 2024, TIV fell by 17.2% month-on-month (m-o-m) to 58,046 units (May 2024: 68,665 units).
This is mainly attributable to a 23.9% m-o-m decline in the national car segment to 34,471 units (May 2024: 45,281 units).
Similarly, commercial vehicles TIV also reduced 5% m-o-m to 5,559 units (May 2024: 5,803 units).
In 1H24, TIV rose by 6.6% y-o-y to 390,26 units.
