KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB Research) has raised its total industry volume (TIV) forecast for the automotive sector to 800,000 units from the previous 760,000 units.
This adjustment reflects the significant order backlogs for Perodua and robust sales efforts by various original equipment manufacturers (OEMs) during the fourth quarter of 2024 (Q4 2024).
In October, TIV saw a month-on-month (MoM) rebound of 20.3 per cent to 69,900 units, driven by Perodua's full production schedule and year-end sales pushes by other OEMs.
However, October TIV saw a 9.1 per cent year-on-year (YoY) decline, dragged down by lower order backlogs.
"We expect sales volume to sustain in the coming months due to the still high order backlogs for Perodua and more aggressive sales campaigns being rolled out by the various OEMs.
"The year-to-date (YTD) strengthening of the ringgit (vs last year) augurs well for the sector, potentially offsetting the higher operating costs environment in Q4 2024.
"We have also noticed more aggressive launches by Chinese OEMs with attractive pricing and features, which will provide stiff competition to incumbent OEMs," it said in a note.
For Perodua, HLIB Research does not expect the impending subsidy rationalisation for RON95 to have a material impact on the national OEM, given that their targeted market segment is likely to qualify for cash subsidies, while other market segments may consider downgrading their vehicle purchase options.
Perodua is expected to launch a new B-segment SUV model and DO1D EV model in 2025.
HLIB Research noted that its top picks are MBM Resources Bhd (Buy, TP: RM6.80) and DRB-Hicom Bhd (Buy, TP: RM1.55) for their strong leverage onto the national OEMs, namely Proton Holdings Bhd and Perodua, which are less subject to competitive pressure for pricing below the RM100,000 segment and potential export growth in the longer term.
"The upcoming wage hike for government employees will potentially support TIV, especially for the A-B segments," it added.