Speedy recovery for the auto sector in 1H of 2021

KUALA LUMPUR: The government’s decision to allow car assembly, showroom and service centre to continue operations with strict compliance to the standard operating procedures (SOPs) under the Movement Control Order (MCO 2.0) will hasten the automotive sector recovery in 2021.

UMW Holdings Bhd president and group chief executive officer Datuk Ahmad Fuaad Mohd Kenali said the automotive industry will continue to register strong recovery year-on-year (YoY) in the first-half of 2021 in line with a consistent industry’s outlook and sales forecast.

“The recovery is expected to be mainly driven by the extension of the sales and services tax (SST) exemption to June 30, 2021 and players intensifying their promotional activities to take advantage of the sales tax exemption,” he told the New Straits Times (NST).

He said UMW Holdings’ subsidiary, UMW Toyota Motor Sdn Bhd (UMWT) will continue to roll out new and improved models for the year to whet our customers’ appetite in addition to the eight models launched in 2020.

Leveraging on Toyota Production System, Ahmad Fuaad said both UMWT’s assembly plants were operating at their planned production levels and it did not foresee any interruption to production schedule.

“However, a prolonged MCO may have an impact on the automotive supply chain. At UMWT, we target to achieve higher sales in 2021 in line with the automotive sector expectations,” he added.

Bermaz Auto Bhd (BAuto) executive chairman Datuk Seri Ben Yeoh said sales vehicles in the first-quarter (Q1) this year would not be bullish despite the Chinese New Year period which normally busy for car sales.

“Most outstanding orders had already been fulfilled in December. The MCO 2.0 also deterred buyers from visiting showrooms.

“There are also some issues on supply as manufacturing activities were erratic during the MCO 2.0 period,” he told NST.

Yeoh said BAuto’s sales would be curtailed by the lack of inventory as the vehicles were mostly sold in December 2020.

“I believe sales will normalise by the second-quarter of 2021 when manufacturing activities return to normalcy,” he said.

Yeoh said it would be challenging for the auto industry beyond June 30, 2021, when the SST exemption expires.

“BAuto will continue to strive to maintain the same level of sales units as 2020. We sold 12,141 units domestically last year and produced 10,000 vehicles at our Inokom Plant in Kulim, Kedah,” he said.

Yeoh said BAuto imported a small volume of complete-built up (CBU) vehicles while recording a lower export volume of 4,000 units of Mazda cars last year due to the pandemic and lockdown in regional markets.

BAuto is currently the official distributor of Mazda vehicles in Malaysia and also the exporter some of Mazda vehicles to Thailand and the Philippines.

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) president and chief executive officer Datuk Zainal Abidin Ahmad said 2021 will be the year of recovery as the marquee’s models continue to be in demand.

He said the sales will be driven by the extension of the sales tax exemption to end of June 2021 and the recent Covid-19 vaccine developments.

Perodua also aims to sell 240,000 vehicles in 2021, an increase of 9.0 per cent from the 220,163 units sold in 2020.

The second national carmaker said the sales projection would be supported by sustained strong demand for its existing models and the extension of the sales tax exemption.

Zainal said Perodua is expected to purchase about RM6.5 billion worth of locally-sourced components in 2021 with the estimated recovery of Perodua’s sales volume.

“With 2020 ended better than previously expected for both Perodua and the industry, we are looking to increase our stock by boosting our production target to 272,000 vehicles this year – the highest in our history.

“This increase will replenish our stock to ensure brisk delivery this year,” Zainal said in a statement recently.

Perodua’s 2021 production target represents a 23 per cent increase over the 220,968 units manufactured in 2020.

With all its models having over 90 per cent local parts content, the carmaker remains the biggest buyer of automotive components in Malaysia.

Zainal said Perodua’s service intakes could grow 20 per cent from two million units in 2020 to 2.4 million units in 2021, comprising both current and new customers.

Proton Holdings Bhd is ranked second in the local automotive sales in January, having sold 5,964 units with the volume plunging nearly 30 per cent YoY.

The national carmaker said the overall figures reflected a lack of supply rather than bookings reduction amid MCO 2.0 to reduce Covid-19 infection rate.

With a market share at 18.5 per cent for the month, Proton said Malaysia’s automotive sales for January were likely to hover more than 32,000 units due to a major drop in sales volume for most automotive players.

Proton said its sport utility vehicles (SUVs) – the X70 and X50 -, as well as the Saga, had continued to lead the company’s sales in January.

Proton Edar chief executive officer Roslan Abdullah said January was a difficult month for Malaysia’s automotive industry.

“We hope the built momentum at the end of 2020 would carry forward following the Economic Recovery Plan (Penjana) incentives until the end of June this year,” he said in a statement recently.

Although MCO 2.0 had dampened some hopes, he said Proton and the whole industry was in full support of all measures the government had in place to control the infections rate.

“The safety of all Malaysians needs to remain as the main priority and companies need to pivot to achieve their goals in a changing market environment,” said Roslan.

While Proton’s order book remains healthy with orders carried over from the end of last year, he said the company would work hard for supply to catch up to demand.

As an industry that depends on a global supply chain, automotive companies are acutely affected by delays to vendors that have a knock-on effect on their production lines.

“Measures like the MCO have naturally affected the number of customers coming to showrooms, but we can receive bookings online helping to boost our sales.

“However, our supply lines have been disrupted over the last few months by the coronavirus, making it difficult to ensure a steady flow of parts needed to build our cars.

He said Proton intends to pursue its product launch plans for 2021 as the company strives for more sales growth both domestically and abroad.

Source: NST