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KUALA LUMPUR: CGS-CIMB Securities Sdn Bhd (CGS-CIMB) expects total industry volume (TIV) to be lower by 8% in the fourth quarter of 2022 (Q4’22) due to macro headwinds which dampened booking sentiments.

In a note on Nov 24, it said the softer TIV forecast was in view of delays in component deliveries due to the ongoing chip and component shortages impacting vehicle deliveries in the near term; higher interest rate environment; and weakening consumer sentiment amid risks of a potential slowdown in the domestic economy.

It noted that in October 2022, the TIV fell by 9.8% month-on-month (m-o-m) to 61,002 units, as sales in both the passenger vehicle (PV) and commercial vehicle (CV) segments slipped by 9.3% m-o-m and 14.4% m-o-m, respectively.

“We attribute the weaker m-o-m TIV in October 22 to the normalisation of order backlog following a surge in TIV delivery in Q3’22.

“Meanwhile, the ongoing semiconductor chip and component shortages are still dragging the domestic automotive industry supply chain down as total production volume fell by 15.6% m-o-m,” it said.

It said for the first 10 months of 2022 (10M2022), TIV rose 51% year-on-year (y-o-y) to 577,800 units, driven by higher sales in the non-national segment (+60.5% y-o-y), led by Japanese marques, while both Perodua and Proton delivered 44.1% y-o-y TIV growth during the same period.

“We attribute the higher sales to the low base effect due to the negative impact of the Covid-19 lockdowns in June-August 2021 on sales, and the extension of the grace period to March 31, 2023 to register cars booked before June 30, 2022 (the cut-off date for the sales and services tax (SST) holiday),” it said.

CGS-CIMB added that it expects Perodua to extend its dominant market position in 2022 in view of favourable market reception for new launches, like the Perodua Alza.

“Moreover, we estimate Perodua still has over 100,000 units worth of backlog orders post-expiry of the SST exemption.

“Meanwhile, Toyota retained its leading non-national brand position with a 13.7%t market share in 10M2022 on the back of 47% y-o-y volume growth,” it said.

Overall, the research house maintained its “neutral” call on the Malaysian automotive sector, naming Bermaz as its top pick due to its attractive 5-5.6% 2022-2023 dividend yields and expanding market share following the addition of Kia and Peugeot marques to its stable. – Bernama

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