Today's Pick (26/09/12/169/862) Analysts positive on auto sector

Analysts positive on auto sector


Marginal impact seen from duty reduction expectation

PETALING JAYA: Analysts are still positive about the local automotive sector despite vehicle sales dipping in August.

OSK Research is maintaining the house's total industry volume (TIV) outlook for the year.

“TIV growth year-to-date remains in positive territory at 1.7%, slightly ahead of our forecast of a 1.1% growth in 2012,” the research house said in a report.

“Sales for non-national marques in the July-August period remain quite encouraging despite talks on the likelihood of a reduction in excise duties, which could be announced in the upcoming Budget 2013 or in the National Automotive Policy (NAP).”

OSK Research also said it was “business as usual” in the used-car market.

“Based on our channel checks, any weakness in sales in September and October would be marginal. Come the fourth quarter, we believe the seasonally slower quarter (as many defer purchases to after the new registration year) could be buoyed by new model launches from key models such as Nissan's entry in the B segment, the Almera, and the all-new Honda City.

“As such, we maintain our TIV growth forecast of 1.1% for now.”

According to the Malaysian Automotive Association (MAA), vehicle sales in August fell by 7,644 units or 12.9% to 51,823 units from the 58,382 units in the same month last year.

The MAA attributed the vehicle sales performance to a short working month due to the Hari Raya Aidil Fitri and Merdeka Day holidays.

Meanwhile, RHB Research is maintaining a “neutral” call for the local automotive sector.

“The sales data for August was more resilient than expected and is reflective of the strong underlying demand, tickled by ongoing attractive new model launches. The key risk to the sector is how the market reacts to ongoing talks on the proposed gradual reduction of new vehicle prices.

“The MAA remained cautious on sales prospects for September, expecting sales volumes to be flat month-on-month, citing consumer caution ahead of the announcement of Budget 2013. Nonetheless, the year-on-year sales growth will still be sizeable due to the seasonal sales slump in September 2011.”

Last week, MAA president Datuk Aishah Ahmad told StarBiz that consumers are postponing car purchases due to several factors, including expectations of goodies in the upcoming budget for the auto sector.

“Orders have slowed down a bit. We believe that people expect something will be announced at the budget,” Aishah was quoted as saying, adding that the MAA does not expect any significant announcement in Budget 2013 pertaining to the local auto sector.

For the first six months of 2012, total vehicle sales rose marginally by 1.4% to 301,224 units from 297,203 units a year earlier. The MAA has forecast total industry volume to hit 615,000 units for this year which, if achieved, would be a new record for the country.

Source : The Star
Date : 25 September 2012
Today's Pick (26/09/12/169/862)