KUALA LUMPUR, Dec. 21 (Xinhua) -- Analysts have foreseen softening car sales in Malaysia next year due to the expiry of sales and service tax (SST) exemption, the implementation of fuel subsidy rationalization, the introduction of the new luxury tax, and higher inflation in the country.
UOBKayHian said in its recent report that it expects total industry volume (TIV) in Malaysia to drop from the high base in 2023 to 660,000 units as it foresees limited catalysts in 2024 that can significantly boost TIV numbers further.
However, stronger-than-expected sales can come from national brands, which appeal to mass-market customers, especially those seeking budget-friendly products, it added.
AmInvestment Bank expects a lower 2024 TIV projection by 6 percent year on year to 670,000 units, compared to its 2023 full-year TIV forecast of 710,000 units as vehicle sales are expected to normalize after the expiry of SST exemption.
The reduction also stems from the potential upside to inflation from the extension of subsidy rationalization to petrol prices in the second half of 2024, impacting consumers' real disposable income.
In comparison to the various attractive models introduced in the second half of 2023, AmInvestment Bank also foresees lower new model launches in the first half of 2024.
Affin Hwang Investment foresees 2024 estimated TIV to decrease by 13 percent year on year to 650,000 units as it sees scar sales normalizing in 2024 until the next replacement cycle takes place in five years.
According to the research house, the key focus for 2024 includes normalization of sales for the auto market, the arrival of new electric vehicle (EV) and non-EV entrants, the decline in consumers' disposable income, and the impact of the luxury tax on premium-car purchases.
Maybank Investment Bank anticipated Malaysia's 2024 TIV to stabilize at 650,000 units after two consecutive record years.
"Signs of demand softening reported by certain car dealers and automotive parts suppliers might soon be reflected in car sales volume," said the research house.
It also noted that local automotive players face risks tied to uncertainties in the industry and policies (ie. the upcoming high value goods tax that is to be implemented from May 1, 2024).
Competition is also expected to intensify, potentially impacting margins for the auto players, it added.
The Malaysian Automotive Association announced last week that Malaysia's January to November car sales reached 718,748 units, 11.51 percent higher than 644,534 units a year ago. ■