Will Proton clinch the No 2 on overall sale?

by RAHIMI YUNUS/ pic by TMR

PROTON Holdings Bhd is on track to clinch the No 2 position based on volume this year after a four-year absence, edging out Honda Malaysia Sdn Bhd in an increasingly competitive market.

The last time Proton was the country’s second-highest carmaker based on units sold in a full calendar year was in 2015.

For the first nine months of this year (9M19), Proton’s sales surged 42% year-on-year (YoY) to 70,330 units including exports, propelling the carmaker to the second position after Perusahaan Otomobil Kedua Sdn Bhd (Perodua). This figure also surpassed the car manufacturer’s overall sales in 2018 at 64,744 units.

Analysts and market observers are positive that Proton could sustain the momentum and defend its current No 2 position based on unit sold until year-end.

“Looking at the pace, Proton could defend its No 2 position, especially with Honda’s numbers on downtrends. If the completely-knocked down (CKD) model of Proton X70 receives good response and X50 CKD is on track, then Proton can defend its position until next year,” Kenanga Research analyst Wan Mustaqim Wan Ab Aziz told The Malaysian Reserve (TMR).

In a statement issued last Friday, Proton CEO Dr Li Chunrong revealed the company’s target of selling a total of 100,000 units this year.

“We are humbled by the response our products have received from Malaysian car buyers. In the space of just eight months, we launched our first SUV and updated all our other models, giving Proton the youngest model range for any car brand in Malaysia.

“The hard work has paid off with increased sales and we are now confident of being able to sell 100,000 units this year, providing us with a solid base to move forward in 2020 and beyond,” he said.

After close to 30 months of partnership with China’s automotive titan Zhejiang Geely Holding Group Co Ltd, the national carmaker is expected to break even this year and become profitable in 2020.

In September, its market share climbed to a 66-month high of 20.2% with 8,934 units sold during the month versus 4,524 units sold in the same month last year, mainly contributed by sales of the facelifted Proton Saga model. According to Deputy International Trade and Industry Minister Dr Ong Kian Ming, Proton exported 1,635 units valued at RM55.1 million between June 2018 and August 2019 to Asia,

Africa and the Middle East. He said the shipments comprised mainly Proton Gen-2, Preve and Persona to primarily Brunei, Mauritius, Jordan, Pakistan, Iraq, Zimbabwe and Egypt.

Wan Mustaqim said, however, Honda is expected to launch a new model of its crowd-favourite Honda City next year, which could boost the Japanese carmaker’s sales.

“That should push Honda closer behind Proton,” he said.

Proton’s positive development helped its 50.1% shareholder DRB-Hicom Bhd to hit more than a five-year high of RM3 per share. The share retreated to close at RM2.47 last Friday as investors pocketed on the rise.

“It is either investor took profit, which means they already anticipated the results going to do well or the results missed expectations. It could be due to other DRB-Hicom’s subsidiaries,

but the story has always been about Proton,” a market observer told TMR.

“How much can they grow? Now, that they have finally turnaround, where the growth would be coming from while automotive sales are not doing well?” the source added.

Non-national carmakers are largely affected by the rise of local rivals, including Perodua that has also registered higher 9M19 sales.

Perodua sold 178,800 cars between January and September this year, up 6% YoY, increasing its market share to 40.4% from 37% for the same period in 2018.

TMR reported that non-national carmakers delivered about 43,200 fewer vehicles to 194,300 units in 9M19, compared to 237,500 in the corresponding period in 2018, according to Affin Hwang Investment Bank Bhd’s estimates and data from the Malaysian Automotive Association.

In a report, Affin Hwang analyst Brian Yeoh said non-national carmakers captured 43.9% of Malaysia’s automotive market share for the nine months, down from 52.2% recorded in the same period last year.

“Demand for Japanese cars remained lacklustre in 9M19 (-18% YoY). Toyota Motor Corp’s sales fell 10% YoY, Honda Motor Co Ltd -19%, Nissan Motor Co Ltd -5% and Mazda Motor Corp -19%. The luxury brands’ 9M19 sales also declined by 21% YoY with BMW AG/ MINI falling 17% and Mercedes-Benz -26%,” Yeoh said.

Non-national marquees have also seen their market share declining this year.

For instance, in 9M19, Honda declined from 17.6% in 2018 to 14.7%; Toyota down from 11.8% to 10.9%; and Mercedes-Benz fell from 2.3% to 1.8%.

TMR recently reported premium carmakers had felt the pressure from global uncertainties and partly because of the presence of tax holiday last year.

Mercedes-Benz Malaysia Sdn Bhd, the top carmaker in the premium segment, expects sales for the year to be lower YoY.

Volvo Car Malaysia Sdn Bhd MD Nalin Jain said the local automotive market is “very tough” now, although he is optimistic that the Swedish marquee could deliver between 30% and 35% growth compared to last year’s figures.