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Auto sales hitting top gear after sluggish start [11-07-2012]  
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January to May total industry volume reaches 244,620 units, making up 40pc of Malaysian Automotive Association’s forecast for 2012

MALAYSIA's automotive market has rebounded and it took the fifth month of the year to rev up an otherwise bearish sales into a bristling one.

With June expected to be another bountiful month for new vehicle sales, the market can expect to close the first half on a high gear.

Going a bit further, there should be a big push by many car companies from this month onwards as a prelude to the festive season starting with Hari Raya Aidilfitri in mid-August.

We will have to wait until the middle of this month for the Malaysian Automotive Association (MAA) to release the sales number for June and, maybe, make its (bullish) revised forecast for the second half.

But the better odd is that the MAA will stick to its original full-year target of a 2.5 per cent expansion to 615,000 units over the 599,877 units recorded last year.

Before things turned rosy, local car companies had to endure sales slump for the first five months of the year, no thanks to tighter rules for car loans and parts supply disruption from Japan and Thailand.

May, however, marked the strongest sales growth for this year both on a year-on-year (y-o-y) and month-on-month (m-o-m) basis.

Total vehicle sales for the month climbed 22 per cent m-o-m to 58,299 units, backed by normalisation in the supply chain as well as introduction of new models. It grew 25 per cent y-o-y.

Although June will not see a similar growth rate, the overall sales number will still be big at nearly 60,000 units, or perhaps more.

Year to date, the January to May total industry volume (TIV) reached 244,620 units, two per cent lower y-o-y but is still better than the 11 per cent contraction as of April. This makes 40 per cent of Malaysian Automotive Association's 2012 TIV forecast of 615,000 units.

The exponential May growth was led by Proton (+40 per cent m-o-m) and Perodua (+23 per cent m-o-m). In the non-national segment, Honda led TIV growth (+49 per cent m-o-m).

New model launches will further underpin the sector's recovery.

In the past few weeks, we saw the launch of the facelifted Honda City and the all-new Toyota Camry. Earlier, it was the Proton Preve C-segment model.

Some of these launches were delayed because of the supply chain disruption for the most of last year due to the tsunami and earthquake in Japan and later the floods in Thailand.

The new Honda Civic and Nissan Almera are among those that will make their debut soon.

The Preve and Camry have generated strong bookings (more than 11,300 units and 2,000 units, respectively) and these numbers will flow through in the coming months.

From the stock market perspective, the sales rebound means the sector's earnings cycle is on an upward trend beyond mere volume growth.

This is accompanied by margin expansion from better plant utilisation, improved model mix and higher margins from new models.

More importantly, the earnings recovery comes off a depressed valuation base as the sector has lagged Bursa Malaysia's benchmark index FBM KLCI's recovery since late last year.

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