A stronger recovery expected for automotive sector in 2022 – Kenanga
22 Dec 2021
The country’s automotive sector is expected to see a stronger recovery next year, with total industry volume (TIV) rebounding by 19 per cent year-on-year to 600,000 units from 505,000 units forecast for 2021, said Kenanga Investment Bank Bhd.
The investment bank’s forecast TIV of 505,000 units represents a five per cent contraction from 2020’s total sales of 529,434 units.
Kenanga, which is maintaining its “neutral” call on the automotive sector, said it expected a buoyant recovery in car sales with the re-opening of economic activities, further driven by the 100 per cent sales tax exemption on completely knocked down (CKD) passenger vehicles and 50 per cent on completely built-up (CBU) units including sport utility vehicles and multi-purpose vehicles for six months until June 30, 2022.
“(This is) especially with the growing number of back-logged bookings for popular models with our 2021 TIV target at 505,000 units, tracking ahead of the Malaysian Automotive Association’s (MAA) 2021 target TIV of 500,000 units.
“We expect a stronger recovery next year with 2022 TIV target at 600,000 units, closely in line with the MAA’s TIV target of 605,000 units (+21 per cent),” it said in a research note.
Meanwhile, Kenanga said its 2022 TIV growth would be driven by sales and service tax exemption in the first half of the calendar year 2022, expected recovery in the economy post lockdown, and the assumption that herd immunity would be achieved which would result in relaxation of standard operating procedures toward revitalising local travel.
The easing of restrictions, as well as recovery in semiconductor chip supply, should push up the demand for passenger vehicles, especially the affordable national marques, it said.
“Nevertheless, for certain models, the recovery in car production could be limited by the ongoing global constraint in semiconductor chip supply,” it said.