RHB Investment Bank (RHB) reported an 18% month-on-month (MoM) increase in total industry volume (TIV) to 68.7k units in May, with total production volume (TPV) rising 30% MoM to 74.2k units. The Malaysian Automotive Association (MAA) noted the anticipated pick-up in performance following the Aidilfitri festivities, prompting RHB to maintain a NEUTRAL call on the sector.
May TIV recorded 68,665 units, up 8.7% year-on-year (YoY) and 18.4% MoM, bringing the total for the first five months of 2024 (5M24) to 328,901 units, an 8% YoY increase. A stronger MoM performance was expected due to the low base in April caused by Aidilfitri. Perodua and Toyota/Lexus led the growth with MoM increases of 34.7% and 5.2%, respectively, while Proton and Honda saw declines of 8.0% and 2.5% MoM. Perodua’s year-to-date (YTD) sales surged 19.6% YoY, raising national carmakers’ TIV share to 63% from 60% in 2023.
On the production front, May’s TPV grew 30% MoM and 14% YoY, with Perodua contributing 46% of the TPV and experiencing a 37% MoM increase. Honda, Toyota, and Proton also saw significant MoM growth of 41%, 31%, and 10%, respectively. Perodua’s plant operated at 118% utilisation, focusing on the Bezza model, which accounted for 28% of total production. Despite the strong growth in May, 2Q TPV was expected to be lower QoQ due to Aidilfitri holidays and scheduled factory maintenance shutdowns.
RHB revised its 2024 TIV forecast to 740,000 units, an 18% upward revision from the previous 625,000 units, reflecting an 8% YTD growth. The stronger-than-expected performance, particularly from Perodua, led to the revised forecast. RHB adjusted its 2024 Perodua sales assumption to 330k units from 250k units. This revised TIV aligned with MAA’s estimates, translating to a 7.5% YoY decline after two record-breaking years. Perodua’s sales were expected to remain flat YoY, with TIV excluding Perodua anticipated to decline YoY.
RHB maintained a NEUTRAL stance on the sector despite the upward revision in the TIV forecast. The sector was expected to post negative earnings growth in 2024, aligned with the cyclical downturn. A weaker TIV performance was anticipated in 2H as backlogs receded and sales volumes normalised. BAUTO remained RHB’s top pick in the sector.
Investors are encouraged to consider the current market dynamics and potential sector downturn when evaluating investments in the auto and auto parts industry, as highlighted by RHB’s analysis and NEUTRAL rating.
