KUALA LUMPUR: Malaysia's strong new vehicle sales are expected to sustain in the coming months due to the still high order backlogs for Perodua and more aggressive sales campaigns.
Although overall current order backlogs continue to ease, Hong Leong Investment Bank Bhd (HLIB) said it still expect sales volume to largely sustain.
This is backed by more aggressive sales campaigns being rolled out by the various original equipment manufacturers (OEMs).
HLIB said the recent strengthening of the ringgit bodes well for the sector, potentially offsetting the higher operating costs environment in the second half of 2024 (2H24).
"We have also noticed more aggressive new launches by new Chinese OEMs with attractive pricings, which will provide stiff competition to incumbent OEMs," it said in a note.
The Malaysian Automotive Association reported another strong month of total industry volume (TIV) at 71,700 units in July 2024, on the back of still high backlogs and new launches for certain OEMs.
HLIB maintains its 2024 TIV forecast at 760,000 units with upside potential, given the still high order backlogs for Perodua and more aggressive sales activities by the various OEMs in 2H24.
"We maintain our Neutral call on the automotive sector. Our top picks are MBM Resources Bhd (Buy, target price: RM6.50) and DRB-HiCOM Bhd (Buy, TP: RM1.65) for their strong leverage onto the national OEMs.