PETALING JAYA: The automotive sector is likely to see stiffer competition in the B-segment passenger car space as there will be several new launches including all-new Honda City CKD, Honda Jazz and Nissan Almera CKD, said AmResearch.
“As these models are expected to enter the local auto market within a short period of time, they will provide consumers with wider options, thus likely to slow down the demand for Toyota passenger cars i.e. the Yaris and Vios which were launched in 2019,” it said in a research note today.
It said this could lead to the possibility of UMW Toyota dishing out price discounts to hold up sales volume thus affecting profitability margins for its automotive segment.
Similarly, the SUV market also expects an influx of a few key SUVs in 2020, namely the Nissan Kicks, Mazda CX-3 CBU, Proton X70 CKD, Proton X50 CKD and the Honda CR-V.
In the SUV market, AmResearch anticipates the national SUVs to be price more attractively compared to the non-national models.
It highlighted that Proton’s X70 and X50 are well-equipped with Level 2 automation with more competitive pricings and better infotainment systems.
“With that, we believe that the non-nationals are likely to lose more market share to national marques in 2020 due to their lack of features and unappealing pricing.”
AmResearch said the upcoming National Automotive Policy (NAP) is expected to further push initiatives for Malaysia to be a regional hub for energy-efficient vehicles (EEV), which could be a growth catalyst for the sector in the first half of the year.
“This direction could potentially see further excise duties exemptions or customized incentives be accorded to carmakers that comply with EEV standards,” said the research house in a report.
AmResearch pointed out that should the incentives and exemptions materialise, it will benefit Perodua which has the highest concentration of EEV-certified models. The policy will also benefit various models from other marques, which comply with EEV standards.
Overall, the research house is maintaining a neutral stance on the automotive sector with a total industry volume (TIV) projection of 610,000 units, which translates to a 1.1% growth for 2020.
However, it believes the premium segment to remain soft this year on the back of weak consumer sentiment.
Meanwhile, the possible OPR cut by 25 basis points in Q1 is not expected to significantly impact the automotive sector or sales of vehicles, said AmResearch.
“In the purchase of big-ticket items such as cars, any reduction in interest rates is not likely to ease consumers’ burden in monthly loan repayments,” AmResearch said.
Its top picks for the sector are MBM Resources, DRB-Hicom and Pecca Group.