KUALA LUMPUR, Nov. 17 (Xinhua) -- Analysts have on Friday revised up Malaysia's car sales projection this year after positive vehicle sales momentum from January to October.
Affin Hwang Investment said in a note that it has revised Malaysia's total industry volume (TIV) forecast to 750,000 this year from the previous projection of 650,000 units.
The upward surpasses Malaysian Automotive Association (MAA)'s 2023 estimate of 725,000 units and reflects the stronger-than-expected sales across top auto brands including market entries by new players like BYD and Chery, boasting competitively-priced models with notable strong monthly sales growth from a low base.
While the research house expects a potential earnings upside in the sector, it believes that weak profit margins and low average selling prices are not helping the car makers to strengthen earnings momentum despite the strong orders.
It noted that as auto dealers offer competitively-priced models to boost consumer demand, some cars became more affordable for large-ticket purchases amid the weak economic climate.
MAA announced on Wednesday that Malaysia's monthly TIV increased 9.89% month on month in October and from January to October, the TIV rose 11.73 percent year on year to 646,840 units.
Meanwhile, Hong Leong Investment Bank Research said in a note Malaysia 2023 TIV may achieve a new high of 790,000 units, supported by the high industry order of 200,000 backlogs units and attractive new launches.
According to the research house, the strong growth from January to October this year was mainly driven by improved supply chains and continued strong demand.
Despite the expected strong TIV this year, Hong Leong sees the automotive sector is on the risk of normalization in 2024, and expects TIV to drop next year after fulfilling the high backlog orders.
TA Securities also said in a note that the car sales growth in October may also be supported by a low base effect in September as consumers adopted a wait and see attitude before the announcement of the National Budget 2024, which was tabled on October 13.
Despite positive car sales momentum in 2023, it observed that forward car sales orders are showing signs of easing, which could translate to weaker sales (estimated at 650,000 units) in 2024.
The research house also expects stiff competition and carmakers may need to offer discounts to entice budget-conscious customers. ■
