KUALA LUMPUR: Registration of new vehicles could chart a 17.9 per cent growth year-on-year (YoY), representing about 600,000 units of the expected total industry volume (TIV) for 2022, according to Hong Leong Investment Bank Bhd (HLIB Research).
Its analyst Daniel Wong said the market will likely see pent-up demand in the coming months due to the extension of sales and services tax (SST) exemptions until June 30, 2022.
He said the sales volume could also be boosted by large order backlogs for various original equipment manufacturers (OEMs) for Proton Holdings Bhd, Perusahaan Otomobil Kedua Sdn Bhd (Perodua), Honda and Toyota, among others.
"Despite the expected strong TIV recovery until mid-2022, we still maintain our neutral rating on the automotive sector.
"We expect TIV to drop post-SST exemption expiry alongside the current ongoing global supply chain issue," he said in a research note today.
Malaysia's new vehicle sales increased 21.5 per cent YoY to 40,581 units registered in January 2022, from 33,392 units recorded previously.
The Malaysian Automotive Association (MAA) said the majority of the sales volume was contributed by passenger vehicles (PV) at 33,668 units and commercial vehicles (CV) accounted for 6,913 units sold in January 2022.
President Datuk Aishah Ahmad said most customers had bought forward in December 2021, but the total industry volume (TIV) for January 2022 was 38 per cent lower than December 2021, which was at 65,184 units.
"TIV in December 2021 was high due to year-end promotional campaigns by automotive companies," she said.
Aishah said supply chain disruptions caused by floods iii certain parts of Klang Valley and East Coast in December last year resulted in lower stocks for certain makes in January 2022.
Meanwhile, production of new vehicles grew 8.3 per cent YoY to 42,961 units in January 2022 from 39,666 units produced previously.
Total production of PV stood at 39,455 units, and CV made up 3,506 units during the month.
MAA said sales volume for February 2021 are likely to be maintained at January 2022 level, supported by short working month and supply chain disruptions due to recent floods and ongoing chips shortages.
Nevertheless, HLIB Research said national OEMs to triumph over the long term with potential growth from new export markets.
"We advise investors to accumulate MBM Resources Bhd with a Buy call (target price of RM4.80) and DRB-Hicom Bhd (RM2.30).
"We also like Sime Darby Bhd (RM2.60) for its strong balance sheet and earnings sustainability on Australia industrial segment and robust demand for automotive across the company's geographical operations."
