-September 2008’s TIV (total industry volume) released by the Malaysian Automotive
Association (MAA), showed a 12.8% increase YoY and 7.4% MoM to register at 50,729 units.
Passenger car (PC) sales increased 8% from the previous month but this was setoff by a 3%
decline in commercial vehicles. The encouraging sales of PC was attributable to heavy
promotional activities ahead of Hari Raya festivities.
-A point to note this time around is the fact that local carmakers gained market share at the
expense of non-nationals. Perodua’s and Proton’s market share increased to 30.9%
(+1.1pp) and 27.5% (+2.8pp) respectively, while Toyota, Honda and Nissan saw their market
share slip by 2.2pp 0.4pp and 1.1pp.
- Nissan, which posted a notable 11% MoM decline (for PC segment), saw its volume driving
models registering significant contraction in sales. The Sylphy, which has seen average
monthly volume of 340 units for the first three months since its launch, saw unit sales
dropping to 308 units (-30% MoM) for the month of September.
- Meanwhile, the Latio, which was launched mid last year registered a 26% drop MoM. Sales
volume dropped to only 219 units in September versus an average 347 units/month for the
first 8 months of 2008. In addition, the Livina saw volumes decline 12.4% compared to the
- Perodua’s and Proton’s gain in market share was unsurprising, as car buyers would
naturally migrate down to more fuel efficient, lower capacity and affordable cars amid
inflationary pressures, depleting disposable income and rising hire purchase rates. Proton
registered a 19.7% MoM growth in sales, driven primarily by the Saga, which posted a 22%
MoM increase to 7,634 units. In addition, sales for its Persona model (Proton’s 2nd largest
volume driver) also registered healthy growth of 20% MoM.
- Perodua - which registered an 11.2% MoM growth - saw a 30% increase in sales of the MyVi,
but its Viva model saw a slight 3% decline. Our channel checks indicate a possibility of
Perodua coming out with a new model in 2009, while no indication on capacity and vehicle
class or price segment has been revealed at this juncture.
- Although Sept TIV bounced back compared to a YoY contraction posted in August, we
think this will be shortlived and the sector will see significant deterioration as the impact of
a slowing economy trickles down to the man on the street. We expect the fourth quarter to
see typical seasonal weakness on top of a more pronounced impact of slowing consumer
- Auto stocks under our coverage currently trade within a range of 7x (Tan Chong) and 11x
(UMW) FY09F earnings and 0.4x (Proton) to 1.7x (UMW) on FY09F book value. Despite
cheap valuations, we remain NEUTRAL on the auto sector given the lack of earnings
catalyst and muted demand visibility going forward, which would cause auto companies to
continue trading at depressed valuations. We retain our NEUTRAL rating on Tan Chong (TP:
RM1.58) and Proton (TP: RM3.02 and our BUY recommendation on UMW (TP: RM7.88).
The information and opinions in this report were prepared by AmResearch Sdn Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmResearch Sdn Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmInvestment Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or
derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgement as of this date and are subject to change without notice.
For AmResearch Sdn Bhd
23 October 2008
Sept TIV: Non-nationals lose market share
Rationale for report : Sector update