By Khairie Hisyam
Despite seeing some recovery in sales for May, the auto sector is still in for a rough ride this year, said Maybank Research today.
In a report, the research house said the improved total industry volume (TIV) in May, up 13% month-on-month (m-o-m) from April, is rather “mild” after the 33% drop month-on-month seen in April.
“May TIV was still down 8% year-on-year (y-o-y),” said Maybank today, adding that in the five-month period to-date, “Perodua and Honda led in terms of market share gains, adding 6.5 and 2.3 percentage points respectively while Proton and Toyota shed 3.8 percentage points year-on-year of market share each.”
In April, TIV fell sharply following a rush in the months leading up to the implementation of goods and services tax (GST) from April 1 onwards. While sales rose pre-GST partly due to aggressive stock clearance by dealers, volume dipped sharply in April as cautious dealers held off on re-stocking amid uncertainty over GST.
Production dip
Despite the sales gain in May however, total industry production (TIP) fell 17% m-o-m in the same month, down 6% y-o-y for the five-month period to-date.
According to Maybank, lower production was seen across all major marques led by Hyundai, whose production fell 66% m-o-m.
In the current five-month period to end-May, Maybank noted higher production for all major marques except Toyota (-15% y-o-y) and Volkswagon (-13% y-o-y).
This raises concerns for inventory pile-up for marques with contracting vehicle sales in the five-month period to-date such as Proton and Hyundai, said Maybank.
For the overall sector, the first five months of 2015 saw Malaysia remain a net auto exporter to the tune of 11,600 units, said the research house further.
Sales to rise, margins to fall
For June, the research house expects TIV to improve further, boosted by pre-Hari Raya sales campaigns. “We expect TIV to recover further in the second half of 2015 on aggressive sales campaigns by dealers in order to meet their targets.”
However, aggressive advertising and promotional activities may shrink margins despite potentially higher sales, cautioned Maybank.
For the full year Maybank maintains its forecast of a 1% y-o-y decline in full-year TIV, expecting some 660,000 units sold by year-end.
Maybank Research maintains a “neutral” call on the sector as it does not feel there are any re-rating catalysts in sight. “We remain selective on our picks and place preference on auto players with significant presence in the economical car segment (energy efficient vehicles) who are not net US dollar importers.”
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