KUALA LUMPUR: RHB Investment Bank Bhd (RHB Research) anticipates weaker total industry volume (TIV) in the second half of this year as sales volume normalisation takes place.
The research firm said its new assumption expects the new vehicle sales in Malaysia to drop by 8.0 per cent on a yearly basis, despite the upward revision of the 2024 TIV to 790,000 from 740,000 units after revising the Perodua sales volume assumption for financial year 2024 (FY24).
"We reiterate our view that the sector is due for a cyclical downturn with regards to sales volume. Perodua may be an exception, given its affordability and value-for-money offerings," it said in its sector update following corporate results in the second quarter (2Q) of this year.
RHB Research said 2Q sector results met expectations, with three counters under its coverage—Sime Darby, Bermaz Auto, and MBM Resources—posting in-line results, while Tan Chong Motor fell below expectations.
On the sector outlook, the firm foresees a stronger TIV in the third quarter (3Q) but may be dragged by weaker data from the non-national marques, given the intensifying competition as a result of new entrants, mainly the China carmakers.
"While electrical vehicles (Evs) are not spared from the competition with the advent of new models, they remain less popular—mainly due to the pricing, with the completely built units (CBUs) being subject to the RM100,000 floor.
"Unless more affordable completely knocked down (CKD) models are introduced or the price floor expires by end-2025, EV sales are not likely to have a meaningful impact on TIV," said RHB Research.
Meanwhile, Kenanga Investment Bank Bhd (Kenanga Research) said vehicle sales will weigh down by e-invoicing and petrol subsidy rationalisation in 2H, thus maintaining the TIV forecast at 740,000 units, more conservative than the Malaysia Automotive Association's (MAA) projection of 765,000 units.
"We believe while it will be business as usual for the affordable segment, fuel subsidy rationalisation will likely hurt the demand for midmarket models, giving rise to a two-speed automotive market locally in 2024," it said.
In general, the firm said the industry's earnings visibility is still good, backed by a booking backlog of 170,000 units as of end-July 2024, unchanged from a month ago.
It stated that more than half of the backlog is made up of new models, alluding to the appeal of new models to car buyers, and this trend is likely to persist throughout this year given a strong line-up of new launches.
"Vehicle sales will also be supported by new battery electric vehicles (BEVs) that enjoy sales and service tax (SST) exemption and other EV facility incentives up until 2025 for CBU and 2027 for CKD.
"We expect more favourable incentives from the government that has set a national target for EVs and hybrid vehicles of 15 per cent of TIV by 2030 and 38 per cent by 2040," the firm added.
Kenanga Research said the government will speed up the approval for charging stations, and the number of stations in operation currently at 3,951 should almost triple to 10,000 by end-2025.