KUALA LUMPUR, Oct. 19 (Xinhua) -- Despite positive car sales momentum in Malaysia, analysts have foreseen rising competition in the Southeast Asian country's automotive sector.
TA Securities said in a note on Thursday that it observed Malaysia's forward car sales orders are showing signs of easing, which could translate to weaker sales in 2024 (estimated at 650,000 units).
"We expect stiff competition and competitive pricing, and carmakers may need to offer discounts to attract budget-conscious customers," said the research house.
Affin Hwang Investment Bank also said in a note that it suspected discounting activities would occur in Malaysia's automotive industry due to competitive pricing pressure impacting sector margins.
It also believes that weak profit margins and lower average selling prices (ASPs) are not helping to strengthen earnings momentum despite the strong orders.
Additionally, with the arrival of both electric vehicle (EV) and non-EV entrants, it said a more competitive landscape is likely to emerge among existing players as it anticipated the potential cancellation of accumulated orders due to the allure of affordable price offerings and attractive after-sales packages by these new entrants.
Meanwhile, Hong Leong Investment Bank Research said Malaysia's 2023 total industry volume (TIV) may achieve a new high 750,000 units (up 4 percent year on year), supported by the high industry order backlogs of over 200,000 units and attractive new launches.
But the research house still expects the TIV to drop after fulfilling the still high backlog orders of 200,000 units.
It is noted that MAA has indicated new EV registrations of 5,630 units (1 percent of market share) for the first nine months of 2023.
The MAA said in a statement on Monday that the TIV in Malaysia fell 6.4 percent to 68,156 units in September from 72,809 units in August.
However on a year-on-year comparison, the TIV rose 4.6 percent from 65,160 units a year ago. ■
