Rakuten Trade's Lau expects total volume to remain broadly in line with last year at around 700,000 to 800,000 units.
PETALING JAYA: The total sales volume for the automotive industry is expected to see further moderation due to declining order backlogs and the ending of the excise-duty exemption for completely- built-up (CBU) electric vehicles (EVs), analysts say.
Hong Leong Investment Bank Research (HLIB Research) is projecting total sales of 780,000 units this year, versus 810,000 units last year, representing a 3.7% year-on-year (y-o-y) drop.
HLIB Research said total sales for the first 11 months of last year remained high at 727,800 units (down by 1.2% y-o-y), mainly supported by national automakers Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Proton Holdings Bhd, as well as companies from China such as BYD, Chery, Icaur, Haval, MG and GWM.
“We expect total sales for last year to end up around 810,000 units (down by 1% y-o-y versus 2024’s 818,400 units),” the research house said in a report yesterday.
HLIB Research said sales for this year would mainly be driven by sustained orders for Perodua models (forecast to be more than 90,000 units), while an increase in the salaries of civil servants effective this month, and full effects of hike in minimum wage that took effect last August would likely support demand for national brands.
“We believe this environment, alongside overall economic growth, will benefit the mass-market segment for cars priced below RM100,000, which mainly consists of national marques Perodua and Proton,” HLIB Research said.
Moreover, the automotive industry is also expected to benefit from the ringgit’s appreciation against the US dollar and Japanese yen this year.
The research house expects the ringgit to further appreciate this year to an average of 4.05 against the greenback (versus 4.28 last year), and 2.72 against the yen (versus an average of 2.86 last year).
“A stronger ringgit will lower the input costs for imported cars, completely- knocked-down (CKD) models, components and materials, and thus improve the margins of local auto players. Automotive brands in Malaysia with major exposure to the US dollar include Toyota, Nissan and Honda, while Mazda is exposed to the yen,” HLIB Research said.
Another supportive factor for the sector is the further deferment by six months to July 1, of a new method to calculate the excise duties on vehicles, as the government is still finalising the mechanism.
“The revision stipulates a new methodology of calculating the open-market value CKD vehicles, expanding excise duties to include non-manufacturing costs, which influences how much taxes have to be paid and therefore, selling prices. However, the Finance Ministry has indicated that it expects minimal to no impact to pricing for CKDs,” the research house said.
Meanwhile, Vincent Lau, head of equity sales for Rakuten Trade, expects total volume to remain broadly in line with last year at around 700,000 to 800,000 units.
Lau said the outlook of the automotive sector remains largely positive, supported by the government’s income-support measures and civil servant pay rises that will help boost consumption.
“There may be some pockets of inflationary pressures here and there but car sales are not expected to fall much. The bulk of sales still comes from affordable internal combustion engine vehicles, mainly from Proton and Perodua, supported by the rollout of new models and continued willingness among consumers to spend,” he said.
Lau said hire-purchase rates remain manageable, and the recent move away from flat-rate financing to reducing-balance calculations helps buyers pay less overall. He added EV adoption in the country is growing although they currently still take up a relatively small share of total sales.
“While competition in the EV segment and cars in the RM100,000 to RM200,000 range is quite intense, particularly with the influx of Chinese cars and EVs affecting some players such as Bermaz Auto Bhd
, the EV segment as a whole continues to perform well,” he said.
Lau said stocks like MBM Resources Bhd, KHPT Holdings Bhd (a supplier of car parts to Perodua and Proton), and Pecca Group Bhd (a producer of car seats for Perodua) are expected to benefit from the automotive sector’s upside.
HLIB Research said new EV registrations from January to November last year came in at 36,700 units versus 19,200 units in the same period last year, making up 5% of new car sales versus 2.6% in the previous corresponding period.
The growth was mainly driven by the introduction of new models, aggressive sales campaigns and the end of excise-duty exemptions for completely built up EVs this year. “We expect EV sales to continue growing this year, mainly supported by cheaper entry-level EVs introduced by Proton, Perodua and Wuling,” the research house said.
HLIB Research maintained its “neutral” call on the automotive sector overall with its top picks being MBM with a “buy” call and target price of RM7.10, and Sime Darby with a “buy” call and target price of RM2.50.
Meanwhile, it also upgraded DRB Hicom Bhd to a “hold” from a “sell” with an unchanged target price of RM1.08, following a recent sell-down of the counter.
