PETALING JAYA: Vehicle sales are expected to trend stronger in the second half of this year, spurred by the gradual opening of the economy, the ongoing sales tax exemption and pick-up in the national immunisation programme.

       AmInvestment Research in a report yesterday said it remained “overweight” on the auto sector, with an unchanged total industry volume (TIV) projection of 575,000 units (9% year-on-year growth) for 2021.

       The research house said it projects a TIV of between 50,000 units and 60,000 units per month post-lockdown, with the bulk of the market share to be tilted in favour of national car brands.

       “We expect TIV growth in the second half of 2021 to be supported by a sustained strong performance of national marques, namely, Proton and Perodua, due to their more attractive pricing and value propositions for their products in the domestic auto market.”

       It emphasised that Proton and Perodua’s fleet of vehicles are priced attractively, with superior value propositions compared with the mid-tier, non-national brands such as Toyota, Nissan and Honda.

       “The Perodua Ativa, Aruz, Proton X70 and X50 sport-utility vehicles are not only more attractively priced compared to their peers, but also provide more interior technological features for a superior driving experience.”

       AmInvestment Research said it expects TIV to pick up the most towards the final quarter of this year.

       “We are expecting a strong finish to the year, as auto players usually offer additional promotional discounts or cash rebates for year-end clearance and the festive season in the fourth quarter of 2021. Also, consumers would want to lock in their purchases to enjoy the reduction in car prices (ranging from 1% to 6%, depending on car models) from the sales tax exemption, which will end by Dec 31, 2021.

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       “Last year, December 2020’s TIV shot through the roof with a total sales volume of 68,800 units (60-month high).

       “We are expecting a similar trend before the end of the tax holiday this year.”

       AmInvestment Research said the outlook of the local auto sector is looking good, for now.

       “We believe that the worst is over and that there will be gradual easing of restrictions globally, alongside global vaccination programmes, which will improve businesses’ cash flows and reduce the disruptions to supply chains. Production of vehicles in the domestic auto market will also be normalised with the gradual easing in the shortage of chips seen recently, especially with Perodua’s Myvi.

       “From our checks, we gather that Perodua is trying to find substitutes to its supply chain via the sourcing of different suppliers.”

       AmInvestment Research also said low financing rates will continue to help spur car sales.

       “According to our in-house projection, the overnight policy rate is expected to be maintained at 1.75% for 2021.

       “The low interest rates will remain conducive for consumers to purchase new passenger cars and obtain vehicle financing.”