Can automakers sell 600,000 vehicles this year?

The industry will need to sell an average 52,000 cars a month in November and December to achieve the TIV

By RAHIMI YUNUS / Pic By MUHD AMIN NAHARUL & TMR File

THE strong sales of Proton and Perodua may not be enough for the local auto industry to achieve its forecast of 600,000 units sold this year, as lower purchasing power sees buyers more cautious with their spending.

As it stands, the industry will need to sell an average 52,000 cars a month in November and December to achieve the total industry volume (TIV), which leaves analysts having mixed views about the target being achieved.

Kenanga Research analyst Wan Mustaqim Wan Ab Aziz is optimistic carmakers would deliver more than 600,000 units by the end of December, boosted by year-end promotional campaigns.

“I think there would be no problem. The number as of end-October stood at 496,000 units, which means about 104,000 units left. Based on rough calculations, car sales this year would be well above 600,000 units if a similar figure in October is achieved in November and December,” Wan Mustaqim told The Malaysian Reserve (TMR).

Total sales of passenger and commercial vehicles in October rose by 14% to 53,870 units, compared to 47,273 units in the previous year’s corresponding month.

For the first 10 months, vehicle sales fell 1.04% year-on-year (YoY) to 496,861 units from 502,128 units in the corresponding period last year.

That was 82.81% of the Malaysian Automotive Association’s (MAA) total industry volume (TIV) forecast of 600,000 units for 2019.

Perodua is expected to retain its No 1 ranking with the last reported number of cars sold hitting over 201,000 units as of October

Local carmakers would have to deliver 103,139 vehicles in the final two months of the year to achieve the full-year sales target.

Wan Mustaqim said sales in November and December are always the highest in the year, except for last year due to an after-effect of the tax holiday.

Another analyst, who preferred anonymity, said the industry will meet the annual sales figure forecast as year-end stock clearance and promotion sales attract buyers.

“Even if sales in November and December were to remain flat month-on-month versus October 2019, that will give roughly 604,600 for the full year,” the analyst told TMR.

There are some who think the 2019 TIV number could fall short due to current economic conditions and the absence of the tax-free period impact felt last year.

“How much room can the TIV grow? Firstly, the economy is not performing that well. Secondly, the revised National Automotive Policy is delayed again and has created uncertainties. Thirdly, there is no more blanket RON95 subsidy,” an analyst at a local brokerage told TMR.

The TIV this year has been boosted by greater sales by Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd (Perodua).

Proton is on course to settle in the No 2 position based on volume and market share this year after a four-year absence, edging out Honda Malaysia Sdn Bhd in an increasingly competitive market.

As of November, the former national carmaker has sold 89,476 vehicles, up 50.1% YoY for a market share of 16.2%.

Perodua is expected to retain its No 1 ranking with the last reported number of cars sold hitting over 201,000 units as of October.

Foreign car manufacturers’ sales volume in the first nine months (9M19) dropped by 18% YoY as national makes gobbled up bigger market shares.

Non-national carmakers delivered about 43,200 fewer vehicles YoY 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 MAA.

In a previous report, Affin Hwang analyst Brian Yeoh stated non-national carmakers captured 43.9% of Malaysia’s automotive market share for 9M19, down from 52.2% recorded in the same period last year.