PETALING JAYA: Automotive companies are expected to report further year-on-year (y-o-y) growth for the first quarter of 2022 (1Q22), as total industry volume (TIV) grew 12.7% y-o-y to 159,752 units during the quarter, according to MIDF Research.

       “This is despite the initial drag from the floods in January and a short working month of February,” said the research unit.

       Notably, the y-o-y growth in 1Q22’s TIV was driven mainly by the non-nationals, which were led by Mazda (up 49.3%), followed by Honda (up 38.4%), Nissan (up 38.1%) and Toyota (up 31.1%).

       The 1Q22 earnings will be supported by higher-than-usual after sales throughput given the influx of flood-impacted units – notwithstanding the discounts offered for the repairs, according to MIDF Research.

       The research house was positive on the automotive sector as a play into a recovery in domestic consumption, and added that the near-term prospects are underpinned by strong outstanding bookings, temporary demand support from the tax holiday, accommodative interest rates and improving employment as well as household incomes.

       MIDF Research’s top sector picks are Bermaz Auto Bhd, MBM Resources Bhd and UMW Holdings Bhd.

       MIDF Research maintained its 2022 TIV projection of a 13% y-o-y recovery to 575,000 units.

       The projection reflected the ongoing chip shortage situation and potential intermittent supply chain disruptions.

       The Malaysian Automotive Association has submitted an appeal to the Finance Ministry to extend the sales tax exemption for new vehicles in light of the supply shortage situation which has impacted the industry’s ability to meet the extended order backlog.

       An additional six-month tax holiday would raise MIDF Research’s 2022 TIV forecast to 595,000 to 605,000 units (17% to 19% y-o-y).