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Losing speed. The persistent weakness in TIV which extended into
Apr, reaffirms our depressing view of the sector. Overall, we expect
2009’s TIV to contract 15-20% YoY. An effective NAP is essential to
reverse the slide. Until then, the auto sector remains an Underweight.
TIV continues to drift lower. Apr’s TIV of 41,135 units continued to
slide, down 7% MoM and 18% YoY. The sequential drop in vehicle
sales was greater on national marques (-10% MoM) vis-à-vis nonnationals
(-3% MoM). Perodua suffered the biggest drop in sales (-14%
MoM) and market share (-2.5% MoM) but was still capable of retaining
its No.1 status in the industry with a 30% market share.
YTD’s TIV down 12% YoY. Other major marques – Toyota, Proton and
Honda too reported weaker sales (-3%, -4%, -12% MoM respectively).
Only Nissan (+2% MoM) showed a 3% rise in sales, spurred on by its
MPV Grand Livina model (+9%). YTD, TIV fell 12% YoY to 159,816
units, accounting for 35% of our estimates of 438,000-465,000 units.
We expect TIV to contract 15-20% for 2009, as the sector continues
to suffer from an absence of new model launches and a stricter
financing environment. Reject rates for Proton’s applicants remain high
whilst the 85-100bps hike in Hire Purchase (HP) rates on non-national
cars will further dampen sales.
A good NAP is needed to wake the sector up. The National
Automotive Policy (NAP), which will be revealed by 3Q09, needs to
boldly address among others: (i) consolidation of national marques and
vendors, and (ii) issues on Approved Permits (APs). A pro-active
guideline will help shape the sluggish sector. Until then, we maintain
our Underweight call, with Sell calls on Proton and Tan Chong.