Automotive sector
Maintain neutral: April 2019 registered sales of 49,964 units (-9% month-on-month [m-o-m], +6% year-on-year [y-o-y]). M-o-m sales growth was weaker as consumers held back purchases anticipating better Hari Raya Aidilfitri promotional offers in the following month as well as waiting for a better financing rate which has indeed materialised after Bank Negara Malaysia reduced the overnight policy rate (OPR) by 25 basis points (bps) to 3% in early May. Nevertheless, y-o-y sales growth was higher on pent-up demand for the all-new models (they are Perodua Aruz, Proton X70 and Toyota Vios).

Sales volume for May is expected to be stronger than April on usual Hari Raya Aidilfitri promotional activities as well as better financing rate as banks have cut their base lending rate by 20bps to 25bps. Moreover, May sales will be supported by the higher delivery of the new models, including the all-new Perodua Aruz (entry-level sport utility vehicle segment), Honda HR-V facelift (includes hybrid), all-new Toyota Vios, all-new Toyota Yaris, Toyota Rush, Proton X70, facelift Proton Persona and Iriz (based on X70 unique features), and facelift Nissan X-Trail.

We maintain our 2019 total industry volume target at 600,000 units, in line with MAA’s target. We believe the absence of a one-off 2018 tax holiday will be offset by exciting new launches in 2019. Note that, we have factored in possible delay in new launches’ timing given the backlog of pricing approvals from the authorities (to three months to five months, improving from five months to seven months, previously), absence of sales boosting tax holiday, and tepid purchasing power. The ministry of international trade and industry (Miti) had decided to increase the frequency of monthly meetings held by the Automotive Business Development Committee, which is chaired by Miti, from once to twice a month to speed up the vehicle pricing approval process.

Perodua continued to lead the pack with a higher market share of 43% (four-month 2018 [4M18]: 41%) and higher sales growth (+10% y-o-y) driven by higher deliveries of the all-new Perodua Myvi (bookings at 160,000, with around 140,000 units delivered), and the all new Perodua Aruz (bookings at 20,000 units, 9,700 delivered). At the No 2 position, Honda registered a lower market share of 15% (4M18: 18%) with a lower sales growth (-11% y-o-y) as consumers held back purchases expecting new models in second half of 2019, which was delayed due to pricing approval issues.

On the other hand, Proton (+50% y-o-y) gained higher market share of 13% (4M18: 9%) owing to the higher delivery of the all-new Proton X70 (bookings at 25,000, with 12,500 units delivered). Drifting further down the list, Toyota scored stronger sales (+5% y-o-y) and unchanged market share of 10% (4M18: 10%) with higher delivery of its best-selling all-new Toyota Vios, and supported by the all-new Toyota Rush (late delivery due to approval issues) and all-new Toyota Camry. Meanwhile, Nissan (-2% y-o-y) saw its market share remaining unchanged at 4% (4M18: 4%), due to the lack of new volume-driven model launches; whereas, Mazda’s sales increased marginally by 1%, with an unchanged market share at 2% (4M18: 4%) attributed to the normalisation in delivery of its all-new Mazda CX-5 after fulfilling backlog orders in the previous months. — Kenanga Research, May 24