KUALA LUMPUR: RHB Research is expecting Malaysia’s automotive sector to deliver another record-breaking year if the monthly total industry volume (TIV) strengthens in the next four months.
In a note yesterday, it said strong deliveries in the second half of 2023 (H2’’23) will be supported mainly by marques with large outstanding backlogs like Perodua and Toyota, largely fuelled by Perodua Axia and Toyota Vios launches.
“August TIV of 72,000 brought year-to-date TIV to 502,000 units. August saw a strong month-on-month increase, mainly from the Japanese carmakers Honda and Toyota, which rose by 30% and 23%, driven by order backlogs.
The research house said its 2023 TIV estimate of 725,000 units parallels the Malaysian Automotive Association’s 2023 forecast.
Meanwhile, given that 2023 could be a second consecutive record-breaking year and based on the lack of catalysts to support high orders and deliveries, RHB Research said 2024 TIV will likely soften y-o-y, especially if 2023 TIV hits a peak.
“We are also expecting the backlog of major marques to gradually ease throughout the fourth quarter of 2023 (Q423). While stronger electric vehicles adoption may be an upside risk to 2024’s TIV, we do not think this will be significant enough to move the needle.
In a separate note, MIDF Research said there is room for 2023’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,” the report said.
Demand could be supported by improvement in labour market, income conditions and easing inflation, the research note said.
While a strong US dollar is a margin risk, it noted that non-national auto players have been raising prices since early this year. It is keeping a neutral call on the auto sector. – Bernama