PETALING JAYA: The automotive market continues to be transformed, spurred by the introduction of Chinese electric vehicle (EV) marques as well as the launch of EVs from domestic carmakers.
Total industry volume for November released last Friday showed demand for imported EVs rose as consumers raced to purchase cars ahead of the expiry of a tax exemption for fully imported EVs at the end of the year.
According to BIMB Research, EV registrations rose 25% month-on-month to 5,417 units, driven by accelerated deliveries from Tesla, BYD and Proton.
The research house noted that EVs now comprise 4.7% of the market.
It has maintained a “neutral” call on automotive stocks as emerging headwinds, including subsidy rationalisation risks, tighter household spending, and a more competitive pricing environment, cap upside potential.
However, the research house said ongoing launches of new models and rollouts of EVs by national automotive firms should continue to support baseline demand.
The research house maintained “hold” calls on MBM Resources Bhd
with a target price of RM5.28 and Sime Darby Bhd at RM2.27 while maintaining a “sell” call on Bermaz Auto Bhd at 54 sen.
Kenanga Research also maintained a “neutral” call on automotive stocks as it projects a drop in total sales to 725,000 units next year, a decrease of 9.9% from forecast of 805,000 units for this year.
The research house referred to 2015, when a tax incentive prior to the implementation of the goods and services tax propelled the year’s total to a record high of 666,000 units before falling 13% in 2016.
“We believe the current situation to be similar, as this year’s sales were sustained by the tax incentives on completely built up EVs, with sales soaring above 40,000 units compared with 22,000 units last year.
“The presumed implementation of new excise-duty regulations next year is also expected to raise prices for locally assembled vehicles between 10% and 30%,” it said.
The research house said it expects a gradual transition in demand for EVs, supported by tax exemptions up until 2027 for locally assembled units.
However, it added that it has a more nuanced view on the pace of EV adoption and when demand for conventional vehicles peaks.
The research house said it does not see this trend happening over the next five years due to infrastructure challenges for EV charging while the new RON95 petrol subsidy mechanism could make the transition even slower as mid and lower income consumers have less incentive to switch.
Kenanga Research said, for next year, Bermaz Auto would be its top pick with an “outperform” call and a target price of 80 sen on expectations that the company would fare better as a niche player for fully imported Japanese models such as the attractively priced Mazda 3.
The research house downgraded MBM Resources to a “market perform” call from “outperform” while also cutting the target price to RM5.25 from RM7 on risks that the company’s 23%-owned Perusahaan Otomobil Kedua Sdn Bhd faces less demand than initially forecast for the recently launched QV-e model compared with Proton’s e.Mas 5 EV.
