KUALA LUMPUR, Feb. 27 – Analysts remain cautious on Malaysia’s auto sales this year despite the country’s car sales rising year on year in January.

TA Securities said in a note on Monday that it expects total industry volume (TIV) in Malaysia to be lower in February, attributable to seasonal factors such as shorter working month due to the Chinese New Year holidays.

After another record-breaking year in 2023, the research house expects the automotive sector to normalize in 2024 and register a weaker TIV of 650,000 units (-18.7 percent year on year) due to the absence of tax incentives and depleting order book.

The potential high-value goods tax is expected to pose some downside risks to Malaysia’s automotive sector, according to TA.

Meanwhile, RHB Investment Bank Research said that a strong TIV number in January is expected, as carmakers continue to offload their order backlogs.

The research house anticipates first quarter to chart stronger year-on-year TIV, supported by the high order backlogs carried forward from last year, which it believes are unsustainable.

It expects 2024 TIV to soften to 625,000 units (-22 percent year on year) given the lack of catalysts that could drive sales to another high.

“Current TIV level is unlikely to be sustained as major marques such as Perodua and Toyota have seen declines in their order backlogs,” it said.

With January TIV making up 9 percent of its full-year projection of 710,000 units (-11 percent year on year), Kenanga Research considered the number meeting its expectation.

The research house said in a note that its full-year projection is a tad lower than the 740,000 units projected by Malaysia Automotive Association (MAA).

“We hold the view that the impending fuel subsidy rationalization will likely hurt the demand for mid-market models, while remaining optimistic on the sales of affordable vehicles,” it said.

Hong Leong Investment Bank Research also expects Malaysia’s TIV for 2024 to normalize downwards to 720,000 units level after achieving a new record high of 799,600 units in 2023, mainly due to declining order backlogs and easing new order intakes over the coming months.

While the current order backlogs will sustain TIV numbers into the first quarter, the research house expected the TIV in Malaysia to soften in subsequent quarters before recovering by the year’s end.

It also expects earnings for the sector to drop in 2024 due to lower sales volume and higher operating costs.

Last week, the MAA announced that Malaysia’s car sales fell 16.45 percent month on month while rising 30.56 percent year on year to 65,499 units in January. 


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