PETALING JAYA: Demand for automobiles is expected to remain strong this year, supported by the increase in salaries for civil servants and the higher minimum wage.
BIMB Research in a report said it was maintaining its total industry volume (TIV) forecast at 810,000 units for this year.
The research house has kept an “overweight” stance on the sector with a “buy” call on Sime Darby Bhd
with a target price of RM2.60 a share.
It also maintained “hold” calls on MBM Resources Bhd at RM5.50 and Bermaz Auto Bhd at RM1.46.
Sime Darby, MBM Resources and Bermaz closed at RM2.18, RM5.70 and RM1.30 a share, respectively, yesterday.
BIMB Research noted the key downside risks to its sector rating included global supply chain disruptions such as semiconductor shortages and production delays, which could limit vehicle availability and sales.
In addition, rising consumption costs will reduce affordability for lower-income groups, dampening demand for vehicles.
TIV for 2024 grew 2.1% year-on-year (y-o-y) to 816,747 units versus 799,821 units in 2023, setting a new all-time record, underpinned by sustained demand throughout the year, the research house added.
It maintained its TIV forecast for this year at 810,000 units based on historical trends, where TIV increased following hike in the salaries of civil servants (7% y-o-y in 2008, 5% y-o-y in 2012).
The pay rises boosted disposable income, enhancing vehicle affordability and also demand.
The salary adjustments, set in two phases (Phase 1: December 2024, Phase 2: January 2026), are expected to drive similar trends which will sustain demand in 2025 and extend growth into 2026.
Additionally, the higher minimum wage that came into effect this month should further support vehicle purchases, particularly among the B40 (bottom 40%) and M40 (middle 40%) wage groups, BIMB Research said.
In 2024, car sales for national brands rose by 5.1% y-o-y to 505,689 units compared with 481,350 units in 2023, supported by stronger sales from key models.
Perodua registered record-high sales of 358,102 units compared with 330,375 units in 2023, primarily driven by higher demand for the Bezza, Axia and Myvi.
Perodua’s manufacturing plants have a combined annual capacity of 320,000 units on a two-shift cycle, highlighting its strong production capabilities.
Proton’s sales slipped by 2.2% to 147,587 units compared with 150,975 units in 2023, indicating slightly weaker demand compared with last year.
Despite Perodua’s market share declining to 39% from 47%, the national-car segment maintained its dominance with 56% market share, while Proton retained its second position at 17%, the research house said.
It said that sales of non-national commercial vehicles year-to-date declined 13.8% y-o-y to 69,567 units compared with 80,676 units in 2023, most likely due to the rationalisation of diesel subsidies last June.
Electric vehicles (EV) only made up 2.5% of total vehicle registrations last year, which was still significantly below the government’s target of 20% by 2030. Malaysia currently has 3,354 public charging points.
To meet the target of 10,000 charging stations by the end of this year, an average of 500 chargers must be installed monthly.
