Malaysia's car sales to stay high after solid October: HLIB

NST Tue, Nov 23, 2021 09:46am - 2 years View Original


KUALA LUMPUR: Malaysia's new vehicle sales are expected to remain at high level in the coming months as supply chain normalises and original equipment manufacturers (OEMs) maintain production to fulfil the strong demand.

Hong Leong Investment Bank (HLIB) said the further extension of sales and services tax (SST) exemption to mid-2022 would ensure strong sales into the first half of 2022 (1H22) before slowing in 2H22.

"We now revise up our TIV (total industry volume) forecast to 500,000 units from 480,000 for 2021," HLIB said in a report today.

The firm said the  Malaysian Automotive Association (MAA) continued reporting month-on-month (MoM) recovery of 43.4 per cent to 63,500 units in October 2021 TIV as industry players ramped up production since mid-August to clear the current high order backlog. 

On a year-on-year (YoY) basis, it was a growth of 10.0 per cent.

Nevertheless, HLIB said the TIV still dropped 5.1 per cent year-to-date to 382,300 units due to two-and-half-months of inactiveness during strict lockdowns from June to mid-August 2021.

Despite the expected strong TIV recovery in the fourth quarter (Q4) of calendar year 2021 (CY21), HLIB maintain its "neutral" rating on the automotive sector.

It expects the TIV to drop post SST-exemption expiry by mid CY22 with current on-going global microchip supply issue. 

"Nevertheless, we advise investors to accumulate MBM Resources Bhd and DRB-HICOM Bhd, as we expect national OEMs to triumph in the longer term with potential growth from new export markets. 

"We also like Sime Darby Bhd for its strong balance sheet and leverage to the China market rebound," it added.

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