Auto industry may have another record-breaking year, say analysts

Published on: Thursday, September 21, 2023

By: Bernama

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The launch of Perodua Axia is expected to contribute to strong car deliveries in the second half of 2023. (File pic)

PETALING JAYA: RHB Research is expecting Malaysia’s automotive sector to deliver another record-breaking year if the monthly total industry volume (TIV) picks up in the next four months.

In a note today, it said strong deliveries are expected in the second half of 2023 (H2 2023), supported mainly by marques with large outstanding backlogs like Perodua and Toyota – primarily fuelled by the launches of Perodua Axia and Toyota Vios.

“August’s TIV of 72,000 brought year-to-date (YTD) TIV to 502,000 units.

“The month saw a strong month-on-month (m-o-m) increase, mainly from Japanese carmakers such as Honda and Toyota, which rose by 30% and 23% respectively, driven by order backlogs,” it said.

The research house said its 2023 TIV estimate of 725,000 units parallels the Malaysian Automotive Association’s (MAA) 2023 forecast.

As for 2024, RHB Research said next year’s TIV may soften year-on-year (y-o-y) on lack of catalysts to support high orders and deliveries, especially if this year’s TIV hits a peak.

“We are also expecting the backlog of major marques to gradually ease throughout the fourth quarter of 2023 (Q4 2023).

“While stronger electric vehicle (EV) adoption may be an upside risk to 2024’s TIV, we do not think this will be significant enough to move the needle,” it said.

In the meantime, MIDF Research said there is room for this year’s TIV to outperform projections, while near-term revenue visibility is solid given the existing order backlog.

“However, the recent round of analyst briefings has suggested that backlog order growth has started to flatten with initial signs of receding compared to March-June levels following a pickup in production to address the long waiting list previously.

“While we believe TIV momentum is close to peaking after record-breaking TIV (numbers) in 2022 with another potential new record this year, we do not expect a drastic fall at this juncture,” MIDF Research said.

It added that the demand could be supported by improvements in the labour market, income conditions and easing inflation.

While a strong US dollar is a margin risk, it noted that non-national auto players have been raising prices since early this year.

Therefore, the research house is keeping a neutral call on the automotive sector.