PETALING JAYA: Kenanga Research has forecasted that the wave of new electric vehicle (EV) launches and the recent cut in EV road tax will help spur the demand for electric vehicles.
In a research note, it has raised its 2024 total industry volume (TIV) projection for the automotive sector by 4% to 740,000 units from 710,000 units, in line with the Malaysia Automotive Association’s (MAA) forecast.
“Recall that current EV lineups are all imported and have a RM100,000 regulated floor price and a limitation on the number of units distributed per month.
“On the other hand, we believe that, while it will be business as usual for the affordable segment, fuel subsidy rationalisation is more likely to hurt the demand for mid-market models, giving rise to a two-speed automotive market locally in 2024,” it said.
Kenanga Research opined that in the affordable segment, its target customers, such as the B40 group, will be spared the impact of the impending fuel subsidy rationalisation and are expected to benefit from the introduction of the progressive wage model.
However, it added that the same should not be said for the mid-market segment as its target customers, the M40 group might hold back from buying a new car upon the fuel subsidy rationalisation introduction.
In general, it said the industry’s earnings visibility is still good, backed by a booking backlog of 200,000 units as at end-May 2024.
“More than half of the backlog is made up of new models, alluding to how appealing new models are to car buyers.
“This trend is likely to persist throughout 2024 given a strong lineup of new launches,” it added.
The research house also believes that a new car is still an affordable luxury for most Malaysian households due to strong consumer confidence, affordability, and attractive new models despite the high inflation and a slowing global economy.
