KUALA LUMPUR: Total industry volume (TIV) for the automotive sector could hit a new high of 750,000 units for 2023, a four per cent increase year-on-year, supported by high industry order backlogs of over 200,000 units and attractive new launches.
This is higher than the Malaysian Automotive Association's (MAA) car sales forecast of 725,000 for 2023.
MAA reported that TIV remained strong in September 2023 at 67,000 units, a drop of -8.8 per cent month-on-month as consumers held back purchases pending 2024 Budget.Year-on-year growth however was relatively flat at 1.3 per cent year-on-year, but a growth of 10.6 per cent year-to-date to 571,800 units on improved supply chains and continued strong demand.
Hong Leong Investment Bank (HLIB) Research said despite the expected strong TIV for the year, it maintains its "neutral" rating on the sector, as it expects TIV to drop after high backlog orders of 200,000 units are delivered.
HLIB Research advises investors however to accumulate MBM Resources Bhd (BUY; target price (TP):RM4.80) and DRB-Hicom Bhd (BUY; TP: RM2.00), as it expects national original equipment manufacturers (OEMs) to triumph over the longer term with potential growth from new export markets. Both national OEMs (Perodua and Proton) continue to lead the market with 60.9 per cent market share in the nine month period of 2023 9M23 (vs. 58.0 per cent in 2022 and 59.4 per cent in 2021).
HLIB Research also said that the entry of several new electric vehicle (EV) players into the market, may pose threats to non-national OEMs, due to their attractive pricing.
MAA reported that there were 5,630 units of new EV registrations (1 per cent market share) for the nine month period of 2023.
Continued new attractive EV introductions i.e. Tesla, BYD, Haval, Neta and Chery (to introduce HEV and EV in 2024), may pose threat to the current non-national OEM incumbents.