Auto sector’s TIV set to rise by 2% to 690,000 in 2023
29 Dec 2022
The automotive sector’s total industry volume (TIV) is expected to increase by two per cent or 690,000 units in 2023 from an estimated 680,000 units in 2022, driven by the continued delivery of order backlogs, said Kenanga Research.
In a note, it said its projection is more upbeat than the forecast of 636,000 units by the Malaysian Automotive Association (MAA).
“We believe the odds are in favour of MAA raising its number along the way. The vehicle sales in 2023 will be driven by the continued delivery of order backlogs to the tune of 350,000 units (as at end-October 2022), which was unchanged compared to three months ago, indicating that deliveries had been replenished with strong new bookings especially for attractive new models even in the absence the Sales and Service Tax (SST) exemption.
“Additionally, the vehicle sales will be supported by launches of new battery electric vehicles which will enjoy SST exemption and other electric vehicle facilities incentives up to 2023 for completely built-up (CBU) and 2025 for completely knocked-down (CKD),” it said.
Kenanga Research said vehicle sales would remain robust in 2023 supported by the reopening of the economy; financial assistance to the low-income group and subsidies on fuels, electricity and selected food items to keep the cost of living in check; a relatively stable job market; and healthy household balance sheets of the M40 (middle 40 per cent income) group.
The research house also said it was unperturbed by the impact of the rising interest rates on vehicle sales.
“Assuming that the Bank Negara Malaysia raised the Overnight Policy Rate (OPR) by another 25 basis points (bps) to 3.00 per cent in January 2023, taking the total OPR hike for 2022 and 2023 to a total of 125 bps (from 1.75 per cent to 3.00 per cent), this would only raise the monthly instalment for, say a Perodua Myvi AV priced at RM60,000 (90 per cent financing margin, five-year tenure), by about six per cent from RM978 to RM1,035,” it said.
Kenanga Research also noted that the actual interest rates charged vary based on terms, financiers, car models, and the individual’s credit score, and newer popular models are most likely to be charged a lower effective interest rate range.
On its sector top picks, it selected MBM Resources Bhd and Bermaz Auto Bhd.