The revision reflects the delay in the re-opening of the sector under Phase 3 of NRP
by HARIZAH KAMEL / Pic by MUHD AMIN NAHARUL
THE Movement Control Orders (MCOs) in Malaysia have hit auto sales in the past few months leading to analysts revising down their forecast on total industry volume (TIV) as automakers warn of weaker sales during the period.
CGS-CIMB Securities Sdn Bhd, for instance, has revised its 2021 total industry volume (TIV) forecast for the automotive sector from 580,000 to 500,000 units due to delay in operation resumption amid movement restrictions.
Its analyst Mohd Shanaz Noor Azam said the revision reflects the delay in the operation of the sector under Phase 3 of the National Recovery Plan (NRP) to September, instead of the initial expectation of the resumption in mid-July.
“This is also in line with Malaysian Automotive Association’s 2021 forecast (2021F) TIV forecast revision from 570,000 to 500,000.
“We project a 5.6% year-on-year TIV decline 2021F due to sales volume falling 3% and 10% for national and non-national brands, respectively,” Mohd Shanaz wrote in a research report on Monday.
The broker has retained its ‘Neutral’ rating on the automotive sector, with Sime Darby Bhd is preferred for its diversified geographical exposure and being a proxy for luxury spending recovery in China and stronger coking coal prices for mining activity in Australia.
The auto sector saw vehicle sales plunged 96% in June to 1,921 units compared to 47,204 registered in May, mainly due to halted sales operations in many states.
In a separate statement on Monday, UMW Holdings Bhd announced its unit, UMW Toyota Motor Sdn Bhd (UMWT), had delivered 85 vehicles in June.
At the same time, the group’s associate company, Perusahaan Otomobil Kedua Sdn Bhd (Perodua), sold 1,009 units in the same month. The group said online showrooms are a viable alternative for customers during the ongoing Full MCO.
It added that its Toyota, Lexus and Perodua online showrooms are gaining traction as consumers are gradually moving towards electronic platforms during the lockdown phase.
To offset the absence of walk-in customers due to closures, both UMWT and Perodua have no alternative but to pivot to online marketing and sales, the auto group stated in the release.
“Currently, both marques have a healthy level of outstanding bookings that can be fulfilled once lockdown restrictions are eased,” UMW Holdings president and group CEO Datuk Ahmad Fuaad Mohd Kenali said in the statement.
The company hopes the government’s extension of the sales tax exemption to Dec 31, 2021, would hasten the recovery.
Ahmad Fuaad stated that upon resumption of operations, UMW plans to ramp up production to hasten delivery to its customers.
UMW said the prolonged lockdown has adversely impacted the entire supply chain in the automotive sector, especially components manufacturing.
Consequently, automotive components exports are also affected, disrupting Toyota’s global supply chain.
The group remains confident of the growth potential for the automotive industry in Malaysia. It has recently announced it will be investing RM270 million into local manufacturing of hybrid electric vehicles (HEV).
UMW said the move is to advance its carbon neutrality initiative and to offer customers a wider range of vehicles, including technically advanced HEV.
“Barring continued lockdown and prolonged disruption in the global semiconductor chips, UMW expects the automotive sales momentum to continue, especially with the extension of the sales tax exemption.
“We are appreciative of the government’s various measures to support the automotive sector,” Ahmad Fuaad added.
UMW shares closed unchanged at RM2.91 yesterday, giving it a market valuation of RM3.4 billion.