FW: Mar 2018 Auto Stats: MY Automotive (POSITIVE) - Still uninspiring

 

 

Good morning,

 

Auto Stats: MY Automotive (POSITIVE) – Mar 2018 TIV: Still uninspiring

• Wait and see. Despite a 23% MoM jump in March TIV (low base in Feb), 1Q18 TIV is down 4% YoY led by the non-national segment (-11% YoY). We believe the slower YoY sales is due to the wait-and-see approach adopted by consumers for big ticket item purchases before the 14th general election (GE14) and 2018 National Automotive Policy review. Our 2018 TIV forecast of 595k units (+3% YoY) is unchanged, expecting the growth to be back-loaded. We remain POSITIVE on the sector from a MYR-led earnings recovery perspective. Our bottom-up preferences are for Perodua (via Pecca) and Mazda (via BAuto) exposures.
• Gainers outnumbered by losers. Our preference for Perodua and Mazda exposure remains validated as both marques saw YoY volume sales gain for three consecutive months vs. the other major marques (i.e. Proton, Toyota and Honda); latest March volume was up 7% and 38% YoY respectively, reflecting sustaining demand for their new launches (i.e. Perodua Myvi and Mazda CX-5). Elsewhere, the prominent continental marques (i.e. Mercedes Benz, BMW, Volkswagen) also saw double-digit growth in 1Q18 (+14%-37% YoY), but offset by double-digit contraction by Proton and the Japanese marques excluding Mazda, leading to 1Q18 TIV contracting 4% YoY.
• TIV growth to be back-loaded? We expect demand to remain sluggish in Apr-May before GE14, except for marques with order backlog from strong demand of their recent model launches. Beyond GE14, the 2018 revision to the National Automotive Policy (NAP) in mid-2018 could also keep consumers in a lookout for a possibly better deal before purchasing. While no details have been divulged regarding the 2018 NAP revision, we believe the key focus would remain in the energy-efficient vehicle (EEV) segment. Other possible revisions include mandatory passenger vehicle inspection for vehicles exceeding a certain age limit, a precursor for End of Life Vehicle (ELV) or scrapping policy. With these factors in mind, we believe that TIV growth, barring any unforeseen regulatory changes, would be in 2H18. However, for now, the risk to TIV remains on the downside.

 

 

Ivan Yap | Analyst, Equity Research

Maybank Investment Bank Berhad (15938-H)
7^th Floor, Tower C, Dataran Maybank, 1, Jalan Maarof, 59000, Kuala Lumpur, Malaysia

Tel: +603 2297 8612 | Fax: +603 2284 2137
Email: ivan.yap@maybank-ib.com

 

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