Tan Chong Motor - Nissan’s answer to the Altis and Mazda 3 HOLD, 30 Apr 2014

Tan Chong (TCM) launched the new generation, C-segment Sylphy yesterday. Notably, TCM decided to fast track the launch of this model ahead of the earlier planned June-July launch and this follows the strong response for the new Altis (750 units/month) and new Mazda 3 (targeted 400 units/month) launched in January and March 2014, respectively. 

The new Sylphy’s selling price starts at RM112K (without insurance, RM116K with insurance), which is 5% cheaper than the outgoing model. However, it comes with a 1.8 litre engine instead of the previous 2 litre powerplant. The engine is mated to a new X-Tronic CVT gearbox, which is 10% smaller and 15% lighter than the previous drivetrain. The new Altis, as a comparison, starts at RM114K (1.8 litre variant, with insurance) while the 2 litre Mazda 3, is priced at RM140K.

The model comes in 2 variants. The lower, E variant is priced at RM112K, while the higher spec VL variant is priced at RM122K and packs in a whole load of extras such as reverse camera, auto self-levelling xenon headlamp with washers, auto folding side mirrors, dual-zone air-cond, leather seats, 6 airbags and a 4.3-inch centre display.

Fuel economy is claimed at 15.6km per litre, which would have qualified it as an EEV model had it been locally assembled. Under the EEV program,  a C-segment model with kerb weight of 1,251kg – 1,400kg can qualify if it achieves a minimum 15.4km/litre fuel efficiency.

The fact that it is a CBU (from Thailand) means that TCM will bear full excise duty cost of 80%, unless there are plans to bring in CKD variants later. It was rumoured that TCM has been exploring possibility to bring in the1.6 litre variants of the model. The outgoing generation 2 litre Sylphy was locally assembled at TCM’s Serendah plant. At this juncture, the Sylphy does not seem to be a big game changer, in our opinion.

TCM is targeting sales volume of 400 units/month for the new Sylphy, or circa 3,000 units for FY14F. However, our quick chat with management suggests that it is expecting overall flattish sales after record volumes of 53,156 units achieved last year. This could mean potential downside to our current forecast of 59K units for FY14F. The stronger USD meanwhile, is a risk to margins on top of flat sales volume. Every 1% change in the USD impacts bottom line by 4%. Maintain HOLD at unchanged fair value of RM5.50/share. Switch into Berjaya Auto (BUY, FV: RM3/share), which is a better play into the EEV theme and margin expansion without USD exposure.

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