Optimism on auto sector running high

By EUGENE MAHALINGAM
eugenicz@thestar.com.my

Analysts follow MAA in revising upwards car sales figures for 2010

PETALING JAYA: Analysts are upbeat about the outlook of the local automotive industry for 2010, saying “the current state of the auto industry is one of optimism not seen since 2005.”

“We believe the TIV (total industry volume) will exceed our initial forecast of 546,000 units as consumer and business confidence improves,” said Kenanga Research in a report yesterday.

The research house said it was revising upwards its 2010 TIV forecast to 568,000 units from 546,000 units originally due to the commendable sales performance in the first six months of the year.

The Malaysian Automotive Association (MAA) has revised upwards its 2010 TIV forecast to 570,000 units from 550,000 units initially due to the stellar sales performance in the first half of the year.

File photo shows a woman walking past Proton car models on display at a showroom in Shah Alam. — AP

The TIV in the first half grew 19.8% to 301,077 units compared with 251,305 units in the previous corresponding period.

However, Kenanga said that it anticipated TIV in the second half of 2010 to “normalise” as the period was expected to be “seasonally slow.”

RHB Research, in its report, said it was maintaining its 2010 TIV growth forecast of 9.5% to 587,698 units.

“We are keeping our 2010 to 2012 TIV projections. We expect TIV to grow 9.5%, 4% and 3.2% in 2010 - 2012, following a 2% contraction in 2009,” it said.

TIV for 2009 was 536,905 units.

RHB Research said it was positive on the earnings outlook for local automotive companies, namely Proton Holdings Bhd, Tan Chong Motor Holdings Bhd, UMW Holdings Bhd and MBM Resources Bhd.

It noted that UMW was looking to increase localisation of its Toyota models, in particular the Camry by 2012 as part of the company’s RM170mil assembly plant upgrading programme.

“The Camry is currently assembled in Thailand and selling for between RM144,000 and RM174,000 as a CBU (completely built-up) unit. Once locally assembled, we believe this price would be brought down by at least 5% as import duty will no longer be imposed,” it said.

The research house also said UMW was looking at increasing the local content of its Toyota Vios, which had 40% local content.

RHB Research also said it was optimistic about the launch of Proton’sWaja replacement model in the final quarter of 2010.

The vehicle is expected to be similar to the Mitsubishi Lancer and priced RM20,000 to RM40,000 cheaper than the actual Lancer.

It also said Proton could be consolidating its plants in Shah Alam and Tanjung Malim and secure contract manufacturing to optimise plant utilisation which would further improve profitability via better cost control and economies of scale.

Sales of Toyota vehicles rose to 34,943 units in the first half of 2010 versus 30,147 units previously, making it the market leader in the non-national passenger car segment.

Sales of Proton vehicles increased to 80,051 units from 67,770 units during the same period.

RHB Research said it was also positive on the outlook for Tan Chong (which distributes Nissan vehicles) and MBM Resources (which has a 20% stake in Perodua).

Perodua sold 94,936 vehicles in the first half of 2010 compared with 77,045 units previously, making it the market leader in the local passenger market.

Sales of Nissan vehicles increased to 13,406 units from 11,220 previously.

An analyst from a local bank-backed brokerage said the TIV performance in the first half of 2010 was within expectations, adding that he had revised upward his forecast to 573,000 from 561,000 initially due to the good industry performance.

He said he was positive on the outlook of the local auto industry, noting that many car companies were offering low interest rates to boost sales.

http://biz.thestar.com.my/news/story.asp?file=/2010/7/22/business/6709333&sec=business

More motor vehicles sales seen in 2010

PETALING JAYA: The Malaysian Automotive Association (MAA) expects Malaysia’s automotive total industry volume (TIV) to grow 2.4% to 550,000 units this year due to an improved global economic outlook and rising consumer sentiment.

President Datuk Aishah Ahmad said the multiplier effects from the Government’s stimulus packages would also boost the economy and create demand for new vehicles.

“It is going to surpass last year’s sales, definitely,” she told a press conference on the automotive outlook for 2010 yesterday. TIV for 2009 was 536,905 units.

Aishah said the Government’s 5% gross domestic product growth target for 2010 (versus an estimated 3% dip for 2009) was also another factor for the better automotive outlook.

If achieved, the 550,000 TIV forecast for 2010 would be the country’s second highest, surpassing 2008’s TIV of 548,115 units. Malaysia recorded its highest TIV in 2005 with 552,316 units sold.

“We expect 2010 to be a record year,” said Aishah, adding however that an increase in interest rates would have a significant impact on vehicle sales.

“Interest rates will have a bearing on vehicle sales. (If rates increase), sales would be impacted as it will affect the purchaser’s monthly payments. But it also depends on the quantum of increase.” Aishah said the MAA did not expect any increase in interest rates any time soon.

“We forecast interest rates to remain stable. At this point in time, we don’t see any indication that it will go up,” she said.

Aishah also said the recently announced petrol subsidy scheme, which requires owners of cars with bigger engine capacities to pay a higher price for petrol, was likely to have a short-term impact on sales.

“Initially there will be some impact but in the longer term people will get used to the price of fuel. If you can afford a bigger car, you can afford not having the fuel subsidy,” she said.

The Government earlier this month said it was planning a fuel pricing mechanism to ensure that only targeted groups, particularly those with lower income, would receive the fuel subsidy.

“However, we would like the Government to be fair and conduct a thorough study because owners of bigger engine sized cars are already paying higher excise duties because excise duties are based on engine capacity.

“At the same time, they are also paying higher road tax. So the Government is collecting a lot of taxes from these vehicle owners,” she added.

Aishah also said that while 2009’s TIV recorded a 2% dip from 2008, it exceeded the MAA’s initial forecast of 500,000 units. She said demand for vehicles improved in the final quarter of 2009.

“The better-than-expected performance was due to the introduction of the Government’s stimulus packages and its decision to liberalise the 27 sub-sectors, the introduction of the auto-scrapping scheme, improved business confidence, increased consumer spending and aggressive sales promotion activities by MAA members.”

In 2009, a total 486,342 passenger vehicles were sold compared with 497,459 units in 2008 while sales of commercial vehicles dipped to 50,563 units from 50,656 previously.

Taken from: http://biz.thestar.com.my/news/story.asp?file=/2010/1/21/business/5510316&sec=business