KUALA LUMPUR (Nov 24): CGS-CIMB Securities Sdn Bhd expects total industry volume (TIV) to be lower by 8% in the fourth quarter of 2022 (4Q2022) due to macro headwinds, which have dampened booking sentiments.

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

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

“We attribute the weaker m-o-m TIV in October to normalisation of the order backlog, following a surge in TIV delivery in 3Q2022.

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

It said that in 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 y-o-y TIV growth of 44.1% during the same period.

“We attribute the higher sales to the low-base effect due to the negative impact of Covid-19 lockdowns in June to 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 service 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 that 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% market share in 10M2022, on the back of a 47% y-o-y volume growth,” it said.

Overall, the research house maintained its "neutral" call on the Malaysian automotive sector, naming Bermaz Auto Bhd as its top pick due to its attractive 5.0-5.6% 2022-23 dividend yields and expanding market share, following the addition of Kia and Peugeot marques to its stable.