Business

Tuesday August 21, 2012

Higher auto sales expected in second half of this year

By EUGENE MAHALINGAM
eugenicz@thestar.com.my


PETALING JAYA: Total vehicle sales in the second half of 2012 is expected to outpace registrations in the first six months of this year, mainly due to improved acceptance of new lending guidelines and inventory recovery by automotive players that were affected by the Thailand floods in 2011.

“We expect the second half of the year to witness higher growth as the acceptance of the new lending guidelines process, complete recovery from previous the year's supply disruptions, key launches in the mass volume segments, and continuous robust sales of hybrid models will drive the growth of vehicle sales,” said Frost & Sullivan partner and head for automotive and transportation practice, Asia-Pacific, Kavan Mukhtyar.

“In addition, the festive season will also contribute towards buoyant vehicle sales. Frost & Sullivan believes that our annual forecast for 2012 should be achievable,” he added.

For now, Kavan said he did not foresee “any significant roadblocks” that would affect vehicle sales in Malaysia.

“Of course the whole industry is looking forward to the announcement of the National Automotive Policy.

“Depending on the direction of the policy there could be some impact on vehicle sales. However, it is most likely that this may be an merging factor for 2013 rather than 2012.”

OSK Investment Research automotive analyst Ahmad Maghfur Usman also concurred that vehicle sales growth would be better in the second half of the year.

“Sales in the second half of the year should be slightly better due to the festive season, such as the Hari Raya push.”

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 total registrations of new passenger vehicles in the first six months of 2012 was 265,855 units. This accounted for 88.3% share of the TIV. This share was marginally lower than the 89.4% achieved in the same period in 2011 when TIV was at 265,654 units.

Meanwhile, 35,369 units of new commercial vehicles were sold in the first half of the year - 3,820 units higher from the number of commercial vehicles sold in the previous corresponding period.

Frost & Sullivan is maintaining its 2012 vehicle sales forecast of 612,000 units. The Malaysian Automotive Association (MAA) has forecast total industry volume (TIV) to hit 615,000 units for this year - which, if achieved, would be a new record for the country.

Following Bank Negara's responsible lending guidelines, which came into effect on Jan 1, loans are now approved based on net income compared with gross income previously.

This initially caused a delay in the loan approval process but most automotive companies have since been adapting to the amendments under the guidelines.

Some car companies also saw their sales in the first half of the year being affected by the Thailand floods late last year, which caused a disruption in the production process.

However, Malaysian Automotive Institute chief executive officer Madani Sahari pointed out that those that were affected by the floods had already recovered and eager to “clear their inventory backlog”

“Honda is recovering from what they couldn't sell earlier this year. Others that were affected, such as Toyota and Perodua are also trying to clear their backlog,” he said, adding that MAA's forecast of 615,000 units is achievable and on track.

Kavan meanwhile said the vehicle sales trend in Malaysia so far was “in line with our forecast and expectations.”

“The first quarter of 2012 started with a dip in sales primarily due to more stringent lending norms. The second quarter has shown a sales recovery. As a result, the first six months of TIV has shown a healthy sign, with a positive increase of 1.4% compared to the same period previous year,” he said.

One industry observer said the vehicle sales trend in Malaysia could “buck the trend” as sales tend to be stronger in the first six months of a year.

“This year could see an exception, as vehicle sales traditionally tend to slow down towards the second half the year,” he said.

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