Research Houses Maintain Forecasts for Malaysia’s 2023 Total Industry Volume

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Research houses here on Wednesday maintained their forecasts for Malaysia’s total industry volume (TIV) in 2023 despite a strong rebound in May.

Kenanga Research said in a note that it maintains its 2023 TIV forecast of 720,000 units of motor vehicles which will match the record level achieved in 2022, underpinned by sustained consumer confidence, affordability of motor vehicles, and attractive new models.

The research house’s projection is about 11 percent higher than the 650,000 units projected by Malaysian Automotive Association (MAA).

The Southeast Asian country’s cumulative TIV for the first five months of this year also rose 12 percent year on year to 300,978 units due to low base effect.

According to Kenanga, the industry’s total booking backlogs have held up at a fairly strong level of 275,000 units, which is unchanged from a month ago despite heavy deliveries.

It said that this indicates sustained strong buying interest, lured by attractive new model launches by players, and it foresees a similar pattern throughout the rest of the year.

Meanwhile, MIDF Research said that Malaysia’s annualized January-May TIV rate is well ahead of MAA’s 2023 projection of 650,000 units and stands at the upper range of consensus estimates.

The research house believes May TIV levels are sustainable, given strong backlog orders.

While acknowledging a higher overnight policy rate (OPR), which had risen 125 basis points since May 2022, it believes demand remains supported by sustained improvement in unemployment rate and income conditions.

It said that a moderating inflation trend also lends support to the market.

MIDF Research, therefore, kept its positive stance on autos given huge backlog orders, sustained new booking momentum, and a supportive macro backdrop.

Hong Leong Investment Bank maintained its TIV expectation of 700,000 units for Malaysia in 2023, a drop of 2.9 percent year on year, as it anticipates continued strong deliveries backed by the high industry order backlogs and attractive new model launches.

Affin Hwang Investment Bank, however, said in a note that it maintained an underweight rating on the sector with an unchanged 2023 TIV forecast of 575,000 units, which falls 20.1 percent year on year, amidst brought-forward sales and weaker disposable incomes.

It observed that order books have been weaker after the end of the sales and service tax (SST) exemption scheme and hence raised the prospects of higher discounting activities to clear inventory.

The upside risks, however, include a greater-than-expected economic expansion, fluctuation of the ringgit versus the U.S. dollar or Japanese yen, and greater-than-expected consumer spending.

It is noted that the national auto players’ market share in the cited five-month period grew by 5.6 percentage points year on year to 61.3 percent.

Meanwhile, the non-national auto players’ market share fell 5.6 percentage points year on year to 39.8 percent due to weaker sales growth.