Analysts Maintain neutral Call On Automotive Sector
The RHB Research is expecting an average year ahead for the Malaysian automobile industry. The sales for last month were on a decline due to the rising expectation from general elections result. But they expect the market and consumers to return to normal pace post that due to decline in interest rates as well as car prices.
With the beginning of second month of Fiscal Year 2014, forecasts and estimations from all sectors have been making headlines lately. For example in Indian automobile sector, the auto analysts considering the slowdown of market expect the sales to pick up by 2-3% after the fall. Similarly, for Malaysian automotive industry, the sales are being expected to be average for the year. The empirical figure for this estimation has been expressed as 641, 560 vehicle units by Kenanga Research.
The vehicle sales chart for the nation shows that there has been a decline of 9% in total vehicle sales due to the general elections. Consumers approach towards vehicles buying has been slow as everyone is expecting changes in wake of election and formation of new regimen. Although on year-on-year basis, the main growth figures on vehicles sales chart have turned out to be 10 % with a numerical value of 45, 564 units in passenger vehicles segment. In the commercial vehicle segment the sales grew by 9% to 6952 units.
The research team is of the opinion that the new Automotive Policy that will be formed after the elections will be focusing more on hybrid and environment friendly vehicles. It would also be looking into several stagnant issues like fuel subsidies, political considerations, high taxes, and higher selling prices.
The decline in sales in month of April was not as low as was expected and they expect that buyers will be returning to market as the interest rates and car prices will come on an affordable level post that. The RHB Research is expecting the total growth level in upcoming year would be steady and will be opening paths to better prospects ahead. It is also of the view that certain factors may add to the amount of risk on the industry such as abrupt rise in fuel prices and interest rates, slowdown in Malaysian economy, and disruption in global supply chain.