Over the past few months of 2004, buyers have accepted the fact that
the price of cars in Malaysia
will remain high. Thus, the recent vehicle sales announced by the Malaysian
Automobile Association (MAA) saw a sudden spike in the month of March, from an
otherwise declining chart since June 2003. With 2004 deemed to be a year of
uncertain operating conditions for the motor sector, analysts are still holding
back on any positive calls on the sector, not least because of the erratic
sales trend.
According to one auto analyst from a local house, this is the
strongest total industry volume since January 2003. Month on month (m-o-m)
growth figures were very strong with passenger car and commercial
vehicles/4-wheel drives growing at 37.9 percent and 22 percent, respectively. In
April 2004, MAA announced that car sales in the country registered a growth of
34.2 percent in March 2004, with 38,258 units sold. Although sales of national
marques were 43.7 percent higher on month to month basis at 24,135 units, they
were 6.3 percent lower than sales of passenger national cars in March 2003.
National marques of commercial vehicles sold 2,428 units, 8.1 percent higher
than sales in February 2004. National car sales inclusive of commercial
vehicles, at a total of 26,563 units, were up 39.5 percent from sales of 19,038
units in February 2003. On the production volume, MAA said the total number of
vehicles produced last month was 39,225 units, up 4.4 percent from 37,572 in
March last year. Total output for the first three months of 2004, however,
registered a decline of 8.6 percent to 97,519 from 106,681 during the same
period last year.
The strong month to month growth numbers in March was largely
due to the low base in February, when national passenger car sales were very
weak and working days were shorter. An auto analyst has also attributed the
strong growth to the pent-up demand over the months of January and February,
arising from the uncertainty of car prices where purchasers waited vainly for
confirmation that the advent of AFTA agreement would spell cheaper prices.
Early this year, the government reduced import duties on several categories of
vehicles as part of the liberalisation of the automotive sector under the AFTA
agreement. At the same time, it imposed new or increased excise duties to
ensure that revenues were not affected.
Analysts feel that the March sales
figures could be an indication that car sales will start to pick up. This is
given the strong economic growth, higher disposable income, and the wealth
effect created from the rising equity market. The low interest rate environment
continues to be conducive. According to OSK Investment automobile analyst,
Elaine Ng, the key contributor to the growth this round is the national
passenger vehicles segment. This was driven by sales demand from buyers who
still prefer to opt for the Proton’s older models especially the Wira sedan
owing to the relatively cheaper price and individual preference. The passenger
vehicles segment achieved a month to month rebound of 43.7 percent to 24,135
units against 16,791 units in the previous month. HSBC Securities investment
analyst David Ng expects domestic vehicle sales to total 420,000 in 2004.
Although this figure is lower than the MAA’s projection of 425,000, Ng believes
that the 4 percent growth is realistic. He also expects some purchases to
continue being postponed as AFTA draws nearer. Jupiter Research expects total
industry sales to remain slower albeit dropping at a slower pace for the rest
of the year, underpinned by continued interest in passenger cars. The launch of
the Proton Gen.2 in particular, improved demand for national vehicles. OSK’s Ng
is conservative in her projection and maintains a 3 percent growth on car sales
for the rest of 2004. She argues that despite the March motor sales increase,
the primary doubt is on the ability to sustain the sales. According to her, if
the average monthly sales achieved are about 35,500 units from next month
onwards, 2004 sales would be inline with her forecast of approximately 3 percent
growth from 2003 sales of 405,010 units. Her projection is based on the fact
that there were fewer new model launches compared to the previous years.
The expected delay of new
passenger car launches and initial production uncertainties posed by the post
AFTA in 2005 will also once again result in consumers’ adoption of a
wait-and-see attitude. The main grouse among most analysts is the fact that
Gen-2 was supposed to be the catalyst to kick start car sales but that has not
happened yet. Also, contrary to expectations, sales for the new model have not
encroached on to the existing older models. According to distributors and car
dealers, sedan models like the Proton Wira are selling very well, while sales
of even the Waja are on the rise. There has also been some disappointment
expressed by buyers of the recently unveiled Gen-2 model. Due to its size, the
Gen-2 is seen to be more suitable for young people rather than families.
Although it is undisputed that a new model may mark a new era
for Proton, perception normally lags reality by at least 5 years, which means
market share losses are inevitable when Proton’s prices move in line with those
of the non-national marques. In early April of 2004, Proton delivered their
first batch of 940 units of the Gen-2. Proton has so far received about 11,200
bookings for the Gen-2. Monthly production could be below previous expectations
of 5,000 units per month. Thus, the Gen-2 is not expected to boost Proton’s
April 2004 car sales figure significantly.
Most analysts agree that with the rising economic growth and
easy financing, the industry’s prospects look better. Although volume growth
will be present, industry earnings would be under pressure from intense
competition (resulting in heavy promotion and discounts) and higher yen costs.
MARCH 2004 VEHICLE SALES
Registration March ’04
March ’03 Change Feb ’04
Change YTD ’04 YTD
’03 Change sales (type) (units) (units) y-o-y (units) m-o-m (units) (units)
Passenger
cars 30,222 28,726 5.2% 21,923 37.9% 75,677 81,328 -6.9%
Commercial 8,036 6,404 25.5% 6,588
22.0% 21,174 18,713 13.2%
Total 38,258 35,130 8.9%
28,511 34.2% 96,851
100,041 -3.2%
Source:
Malaysian Automotive Association (MAA)
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