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Vehicle sales between 530,000 and 580,000 this year: Analysts

KUALA LUMPUR: New vehicle sales are projected to increase 10 per cent year-on-year (YoY) to 580,000 units this year, backed by higher sales and multiple new launches, according to CGS-CIMB.

Its analyst Mohd Shanaz Noor Azam said sales for Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) would likely increase 20 per cent and 13 per cent YoY respectively.

"Demand for Proton X50 and X70 remains strong, with Proton's management indicating that these models have order backlogs of about three to four months," he said in a report today.

Mohd Shanaz expects the total industry volume (TIV) to improve from March onwards with the resumption in economic activities, supported by the government's Covid-19 vaccination programme in February.

He said Perodua had received over 8,000 bookings for its recently-launched Ativa sport utility vehicle (SUV).

"Overall, we believe these positive developments will help support TIV growth in the second quarter (Q2) of 2021 and beyond. We maintain a neutral on the local automotive sector," he said.

He said the sector remains on track for an earnings recovery this year with a forecast of 40 per cent net profit growth compared to a 26 per cent contraction last year.

Key upside risks to its call include strengthening of the ringgit against the US dollar and Japanese yen, a reduction in interest rates and favourable government policies to revive domestic demand.

The ringgit's depreciation against the US dollar and Japanese yen, interest rate hikes and a prolonged Covid-19 outbreak were among the key downside risks.

MIDF Research analyst Hafriz Hezry has affirmed the firm's positive call for the automotive sector with slightly lower TIV forecast of 550,000 units this year.

"Year-to-date, TIV is down 10 per cent to 75,621 units, but March-April numbers should improve further on removal of the 10km movement restrictions, full operations of the Road Transport Department and pre-Raya purchasing," he said.

Despite the temporary supply constraint, he said demand was still strong with one to three months' worth of booking bank on average, backed by the extended tax holiday.

"The stronger ringgit further underpins the sector's earnings recovery this year," he added.

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