KUALA LUMPUR, Oct 13 — RHB Research expects the total industry volume (TIV) to ease to a more normalised level in 2024, likely to be between 600,000 and 650,000 unit range, despite continuously driven by lower-priced vehicles amidst the high interest rate environment.
“We see a few compelling factors for 2024 automotive sales in breach of another high. We think the strong TIV performance in 2022 and year-to-date (YTD) 2023 reflects pent-up consumer discretionary demand left over from 2020 and 2021.
“Our 725,000 TIV forecast for 2023 implies a four-year (2020-2023 forecast) average annual TIV of 621,000 units, which is largely in line with the 10-year pre-pandemic average of 618,000 units,” it said in a note today.
On top of that, RHB Research said gross loans for the purpose of purchasing transport vehicles rose 7.6 per cent and 6.3 per cent year-on-year in 2022 and year-to-date till August 2023, while TIV rose higher by 41.6 per cent and 11.6 per cent in 2022 and year-to-date till August 2023.
“This suggests that vehicle purchases in these two years were mainly lower-priced models like Perodua Myvi and Axia, and Proton Saga.
“We remain cautious on the softening car sales in 2024, given the uncertainty and lack of catalysts. Key downside risks include softer-than-expected orders and deliveries, as well as resurgent supply chain issues,” it said.
Meanwhile, MIDF Research has maintained its “Neutral” call for the automotive sector in the near-term, as it believed the strong TIV numbers this year has largely played out, while order backlog growth seems to have peaked with initial signs of receding.
“Our sector picks are Bermaz Auto Bhd and MBM Resources Bhd as these stocks remain sector laggards trading at around 30 per cent discount to mean price earnings ratio.
Bermaz Auto is our tactical favourite riding on the weak Japanese yen and completely knock down model expansion, while dividend yield of 9.0 per cent is attractive.
“We also like MBM Resources as a cheap proxy to Perodua which has high model localisation rate with minimal foreign exchange risk, as well as strongest backlog bookings among the major players stretching up to six-seven months,” it said in a note.
— Bernama
