PETALING JAYA (Dec 30, 2013): Malaysia's automotive sector is set to see another good year in 2014 despite challenging times, after achieving stable growth in 2013.
Industry experts and auto analysts however, caution that 2014 is likely to register smaller growth following the government subsidy rationalisation measures.
MIDF Research auto analyst Kelly Tan said the research firm forecasts lower total industry volume (TIV) growth of 2.4% in 2014 to 668,000 units compared to an estimated 656,500 units to be sold by the end of 2013.
"Our forecast for 2014 is smaller because it may be rather quiet given our expectation that the year will see launches being mostly refreshed models, rather than growth-propelling brand new ones. Hence, our 3.9% TIV growth forecast in respect of 2013 remains intact," she said.
"In view of the subsidy rationalisation measures of the government, people will be more cautious in spending," she added.
Tan said MIDF maintain its "neutral" stance on the automotive sector with UMW Holdings Bhd and MBM Resources Bhd kept on neutral with a target price of RM13.15 and RM3.94 respectively.
Tan said MIDF maintain its "neutral" stance on the automotive sector with UMW Holdings Bhd and MBM Resources Bhd kept on neutral with a target price of RM13.15 and RM3.94 respectively.
She said however the research firm has downgraded its recommendation on Tan Ching Motor Holdings Bhd (TCM) to neutral with a target price of RM6.38, given its outlook of a more subdued performance by TCM in FY14 following its outstanding performance in FY13.
RHB Research Institute expects competition in the marketplace to remain intense and consumers to become increasingly price-sensitive, with more buyers trading down to cheaper models.
It said auto manufacturers are likely to respond to these trends by introducing more value-for-money models.
The research firm expects 2013 TIV to exceed 650,000 units but it expects the auto sales to continue growing albeit at a slower pace and forecast TIV of 675,000 units 2014.
It said resilient consumption spending will underpin demand for passenger cars while a pickup in economic activity will lift commercial vehicle sales.
RHB Research Institute said the pipeline of new models remains strong going into 2014, while the competitive marketplace will yield ongoing promotions and deals to entice car buyers.
It pointed that the introduction of more value for money models from car manufacturers will also help to sustain sales volume.
Recapping 2013, RHB Research Institute said it has been a stop-start year for the auto industry volume-wise. It said auto sales began the year well with Q113 growth surging 13.8% year-on-year, helped by a low base in 2012 when the industry was hit by supply chain issues in addition to new responsible lending guidelines.
TIV in Q213 slowed, declining 1.3% quarter on quarter and bringing cumulative first half 2013 to 4.1% year-on-year due to consumer hesitation in the run-up to the General Election in May.
However, auto sales rebounded in Q313 as consumer expectations moderated helped by the boost in sales from the AidilFitri festive holidays and the strong market reaction to the value for money Proton Saga SV.
Malaysia Automotive Institute (MAI) CEO Madani Sahari (pix) however was more optimistic about 2014, saying that it would be another record breaking year. MAI forecasts total industry volume to hit 670,000 units in 2014.
Madani said consumers can expect new launches that are more attractively priced next year, while other models will be released with cosmetic changes with enhanced features.
"We are confident that 2014 would be a record breaking year. If you see the tightening of hire purchase guideline announced by Bank Negara Malaysia on car loan did not impact the car sales. I think we are intact for 2013 despite the ruling was in place," he told SunBiz recently.
He pointed that buying a car was a necessity now as the government is still in the midst of improving the public transportation system. The works of improving the public transportation like the LRT line, MRT line and buses are still on-going.
He said the government will continue to work together with auto players to transform the industry.
MAI estimates TIV to reach 638,000 units in 2013 while the Malaysian Automotive Association (MAA) expects sales to grow by 2% to 640,000 units.
In 2012, MAA announced that the total TIV registered was a record breaking 627,753 units.
Madani said the much awaited revised National Automotive Policy (NAP) to be announced mid of January, will play a big role as a long term policy for the competitiveness of the industry.
He said the NAP will bring in quality investment from both domestic and foreign in order to achieve Malaysia's ambition to become an energy efficient hub.
According him, more investments are expected in areas such as power train (engine), aluminum casting and high end engineering plastic.
"The NAP is moving in the right direction. The concept of NAP was to ensure the industry become sustainable and bring better economic sense as well as benefit the society,"
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