KUALA LUMPUR: Malaysia's car sales should sustain in the coming quarters backed by still high order backlogs for Perodua and more aggressive sales campaigns, said Hong Leong Investment Bank Bhd (HLIB).
The total industry volume (TIV) in June slowed 17.2 per cent month-on-month (MoM) and 5.2 per cent year-on-year (YoY) to 58,000 units, due to planned plant shutdowns, lower number of working days and continued normalising demand.
Nevertheless, HLIB said year to date (YTD) TIV still improved by 6.6 per cent YoY to 390,300 units, mainly driven by Perodua (improved productions) and Honda (stronger demand for newly-launched models).
HLIB also expects earnings for the sector to dip in the second half of 2024 (2H24) due to higher operating costs.
"We have also noticed more aggressive new launches by new Chinese original equipment manufacturer (OEM) with attractive pricings, which will provide stiff competition towards incumbent OEMs.
"There is also increasing competitive price discounts among new electric vehicle (EV) models, which have gained a higher market share of 1.7 per cent in 1H24," it said.
Overall, HLIB maintained its "Neutral" call on the automotive sector with top picks being MBM Resources Bhd (Buy; target price :RM6.50) and DRB-HICOM Bhd (Buy; target price :RM1.65), leveraging onto national OEMs.
"The entrance of several new OEMs into the market may pose threats to non-national OEMs, due to their aggressive launchings with attractive pricing schemes," it added.