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Automotive Industry's Volume To Grow 2.05 Percent, Says OSK Research [23-01-2011]  
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he automotive industry's total industry volume (TIV) is expected to grow by 2.05 per cent at 617,569 units, says OSK Research.

"The movement of the TIV growth projection has a strong correlation of over 96 per cent,suggesting it moves in a linear line, with gross domestic product(GDP) growth, which continues to boost consumer sentiment," it added.

The firm also said, its house forecast of the GDP growth, is 5.8 per cent for this year.

"However,factoring in the high base effect coupled by concerns over the higher petrol prices going forward as subsidies are trimmed further, we prefer to be conservative and discount the regression forecast by three per cent, giving a TIV target of 617,569 units for 2011," it said in a research note on Friday.

Meanwhile, the forecast also follows the limited upside in hire purchase interest rates, as the firm does not foresee it negatively impacting demand for vehicle sales.

OSK also expects an employment boost and favorable age demographics, to contribute positively to this sector.

Additionally, both Proton and Perodua have plans to launch a new model sometime this year, with Proton expected to launch the Persona or Gen2 replacement.

"Perodua's management hinted that they will be launching an entirely new model this year, as opposed to our earlier view, that it would be a Myvi replacement," it said.

Meanwhile, OSK said, most other launches for this year will be dominated by completely built-ups (CBUs), and some completely knocked downs (CKDs), by Naza's range of marques.

"The downside risks to our projections in the immediate term would be a drastic hike in petrol price and sudden grim economic outlook.

"While, we expect the industry margin to decline on inflationary pressures on raw materials and components, nonetheless, we see the earning growth momentum continuing to be respectable given the higher demand amid the strengthening ringgit in the short term," it added.

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