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KUALA
LUMPUR: RHB Research is cautious about the outlook for the auto
industry and is Underweight on the sector with the exception of Berjaya
Auto of which it has a Buy Call.
It said on Wednesday despite a tough
environment for consumer discretionary spending, November’s total
industry volume (TIV) held up as consumers brought forward their
purchase decisions ahead of anticipated price increases in the new year.
“We reiterate our cautious view on the auto
industry’s 2016 outlook with continued pressure on both volumes and
margins. Berjaya Auto is our sole BUY call. Underweight on the auto
sector,” it said.
RHB Research said TIV in November increased
marginally (+0.6% on-month, +1.4% on-year), based on the Malaysian
Automotive Association’s (MAA) data.
The average TIV for October and November was 5.8% higher vis-à-vis the average TIV from April-September.
“We excluded the TIV for the months prior to
April to remove the effect of spikes in sales due to the implementation
of the goods and services tax (GST). Cumulative 11M15 vehicle
registrations reached 597,234 units (-0.8% on-year).
“Despite the soft consumer sentiment, auto
sales have held up so far, as consumers are bringing forward their
purchase decision in anticipation of higher vehicle prices in 2016,” it
said.
RHB Research said aggressive sales
promotions and marketing campaigns have continued with distributors
trying to achieve their 2015 sales targets.
Proton and Perodua sales slumped in
November, -12.6% and -8.6% on-year respectively. However, cumulative
sales for Perodua rose 8.6% on-year while Proton’s sales contracted
12.2% on-year.
Perodua’s performance reflects the success
of the Axia, while the languishing Proton sales are indicative of its
dated model line-ups and weak brand presence.
Honda is maintaining its lead ahead of
Toyota and looks like it would dethrone the latter as the No. 1
non-national marque in 2015. Mazda sales expanded by 22.9% on-year on
the back of new models introduced recently.
“The MAA expects sales volume for December
to match November’s. Given that consumers have brought forward their
purchases for next year – amidst a weak environment for big ticket
consumer discretionary spending – we are expecting TIV to contract to
640,000 units in 2016.
“In particular, 1Q16 sales could be
exceptionally soft from consumer aversion to higher car prices. We see
the national marques being affected, given the more severe impact of
high living costs on their typical target consumer segments.
“The auto industry is likely to remain
highly competitive in 2016, with margins staying under pressure from
lower volumes and higher costs,” said RHB Research.
