KUALA LUMPUR: Market observers believe the total industry volume (TIV) for new vehicles in 2020 to hover between 460,000 units and 550,000 units, owing to mixed reactions on the recovery for the local automotive market.
Most analysts have maintained an "overweight" and "neutral or "positive" stance on the automotive market due to encouraging early trend of recovery backed by tax-holiday-induced demand, robust liquidity created for consumers and a low interest rate environment that will drive a rebound in vehicle-buying sentiment.
Malaysia Automotive, Robotics and IoT Institute (MARii) chief executive officer Datuk Madani Sahari said despite a slowdown at the start of the year due to the Movement Control Order, the local industry has demonstrated its resiliency by achieving 285,000 units in the first-eight month of 2020.
"These figures were backed up by the government's decision to implement the Sales and Services Tax (SST) exemptions on vehicles, as well as moratoriums on hire purchase agreements to encourage spending among consumers," he told the New Straits Times yesterday.
Although the end of the moratorium may naturally lead to cautious spending, the SST exemptions would still in place until December 31, 2020.
He said this allows consumers to have ample opportunity to continue purchasing vehicles should they have the need to do so.
"The introduction of many new models, such as Proton's X50, have also excited market interest, particularly those looking for new cars within the mid-market segments.
"Initial feedback from Proton's recent media preview has been very positive, and its official launching will hopefully provide a strong push towards increasing vehicles sales towards the end of Q4," he said.
Madani said such resilience would be the key for innovative sales incentives to be formulated in order for the domestic industry to move beyond the year.
He said International Trade and Industry Ministry, together with MARii would continue working closely with the government to develop solutions to lower buyer commitment towards ownership.
"As vehicle ownership ties into overall cost of transportation (which include fuel, insurance, hire purchase, road tax costs, etc), we are looking above the main issues to find new ways to incentivise both consumers and industry players to survive these testing times caused by the pandemic," he added.
MIDF Research analyst Hafriz Hezry car prices had been reduced by between 2.0 per cent and 7.0 per cent given savings from the sales tax exemption incentive.
"For now, we stick to our target of 554,000 units for 2020, representing an 8.3 per cent year-on-year (YoY) contraction," he said in a report today.
Affin Hwang Capital analyst Brian Yeoh said cheaper car prices from the sales tax exemption and new model launches in the pipeline should sustain sales momentum, despite a 28 per cent contraction in TIV during the first-eight month, which stood at 285,000 units.
"The current TIV account accounted for 61 per cent of our full-year forecasts of 465,000 units," he said in a research note today.
Yeoh said both national carmakers continued to perform well in August for Proton Holdings Bhd's (Proton) and the Perusahaan Otomobil Kedua Sendirian Bhd (Perodua) with 11,387 units and about 23,000 units, respectively.
"Proton is expected to launch the X50 sport utility vehicle (SUV) in October 20, and targets to sell 4,000 units for 2020, which we think is achievable given that the all-new B-segment SUV has received over 10,000 bookings.
"Perodua's performance was also commendable with August 2020 sales rose by 13 per cent YoY led by healthy demand for its existing models, maintaining its dominant position with a 42 per cent current market share.
"Overall, the national's combined eight-month 2020 market share stood firm at 63.7 per cent compared to 56 per cent achieve in the same period a year ago," he said.
For non-national car, he added that better sales volume in the remaining months should be achieved as Honda and Nissan are expected to launch the Honda City and Nissan Almera.
Kenanga Investment Bank Bhd (Kenanga Research) analyst Wan Mustaqim Wan Ab Aziz retained the TIV forecast at 475,000 units for 2020 citing that the upcoming new volume-driven launches in the fourth-quarter of 2020.
"Proton X50, Honda City and Nissan Almera could offset the cautious consumers' sentiment from the ending of loan's moratorium by September 30, 2020.
"We upgrade our sector call to Neutral (from underweight). We believe that sales tax exemption until end-of the year may help spur sales along with better incentives program under National Automotive Policy 2020, positive impact from Bank Negara Malaysia's overnight policy rate (OPR) cut and pre-emptive measures to assist those who might be financially challenged by Covid-19 impact.," he added.