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Malaysia's auto sector on track to meet target [20-12-2012]  
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Total industry vehicle sales in the country are on track to meet year-end targets, as distributors offer rebates and other goodies to boost sales with sales staying above the 50,000-mark in November.

Maybank Investment Bank Bhd research head Wong Chew Hann said besides aggressive pricing campaigns that were expected to persist this month and into January, momentum would also come from new model launches.

“Barring all unforeseen circumstances, 2013 vehicle sales should grow 2% to 3% year-on-year, based on our in-house 2013 real gross domestic product growth estimate of 4.8%.

“We believe that auto players will continue to expand capacity and raise production efficiency in 2013, leading to lower car prices. Key developments from this capacity expansion would position Malaysia as a viable alternative regional automotive hub,” he said.

Vehicle sales in November declined 3.6% month-on-month but grew 10.5% year-on-year to 53,365 units.

On sales expectations for this month, Maybank Kim Eng in a report yesterday noted that December was typically a low season for auto sales, given the shorter work weeks due to the Christmas and New Year holidays.

“But with higher car prices looming in 2013 and only one month left in 2012, we anticipate that there will be a rush by customers to make purchases, and this will provide much-needed support to sales volume. While it will not dramatically lift month-on-month sales volume growth in December, a correction, however limited, cannot be ruled out.

“Thus, we expect sales volume in the fourth quarter of 2012 to remain flat, if not slightly higher vis-vis the third-quarter 2012 sales volume realisation of 281,000 units.”

Hong Leong Investment Bank, however, said that with the auto companies offering huge discounts and complimentaries to boost sales towards year-end, their sales margins could be affected.

The research house noted that the combined market share of Proton and Perodua slid to 47.1% from over 50%, as foreign original equipment manufacturers offered huge discounts (lowering the price advantage of national cars), as well as lowered prices of newly launched cars, namely, the Nissan Almera and Mitsubishi Mirage.

Hong Leong said potential risks to the local automotive sector would include prolonged tightening of banks' higher purchase rules, a slowdown in the Malaysian economy, a global automotive supply chain disruption, a sudden jump in fuel prices and interest rates and a depreciation of the ringgit.

MIDF Research, meanwhile, said its 2012 total industry volume (TIV) forecast of 611,140 units was within reach.

“The 11-month year-to-date estimated vehicle sales of 567,170 units are largely in line with both our full-year TIV and the Malaysian Automotive Association (MAA)'s forecast of 615,000 units that constitute 92% of total TIV forecast.

“However, we concur with MAA's expectations on December figures to be lower due to the aversion to year-end deliveries among prospective buyers.”

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