According to the Malaysian Auto Association (MAA), auto production grew 5.6% in 2013, to 601,407 units. While passenger car production registered healthy growth of 6.7%, to 543,892 units, output in the commercial vehicle (CV) segment contracted 4.1%, to 57,515 units. For 2014, we expect growth in both CV and passenger car production, and forecast overall auto production growth to come in at 4.9%, to 630,590 units.
Auto sales in June 2014 grew 9.2% year-on-year (y-o-y) to 58,561 units, bringing sales for H114 to 333,142 units, an increase of 6.3% y-o-y.
We are maintaining our 2014 passenger car sales growth forecast of 4.0%, to 600,000 units, as high base effects will temper growth in H214.
Slowdown In Construction To Weigh On CV Segment
The weakness in CV sales has been more pronounced than we envisaged. Sales in the segment declined 3.0% y-o-y over the H114 period, to 36,363 units. While we expect the country's ongoing ETP to continue providing support for CV demand ( see 'EEV Policy And ETP Will Ensure Strong 2014', January 14), one factor that could have led to the underperformance of the segment is cooling demand in the real estate sector.
While a lot of lending has been channelled into the real estate sector in the past few years, the recent macroprudential measures put in place by the government to rein in property speculation appear to be having the desired effect of curbing speculative demand for real estate. This is corroborated by the slowdown in money supply and credit growth in recent months. This has resulted in a slowdown in the construction sector, which has contributed to weaker CV demand.
NAP And EEV
The revised National Automotive Policy (NAP) contains incentives to promote the production of energy-efficient vehicles (EEVs). We believe this segment is poised to increase its popularity in the South East Asia region especially as the governments in various countries choose to lower their fiscal burdens by curbing fuel subsidies, which results in...