KUALA LUMPUR (NewsRise) - Malaysia's vehicle sales rebounded in August from the previous month, sparking hopes of some volume pick-up in the months ahead on the back of scheduled model launches targeted at mass-market consumers.
Still a sustained recovery in the automobile industry is unlikely any time soon given cautious consumer spending and tighter credit rules in a slowing economy, analysts said.
Total industry volume, including commercial and passenger vehicles, surged 23% to 52,312 units in August from July, the Malaysian Automotive Association, or MAA said in a statement. However, sales contracted 2.1% in August from a year earlier compared to July's 28% year-on-year plunge.
"Total industry volume should improve further in the coming months given several new model launches by year end," said MIDF Amanah Investment Bank's analyst Hafriz Hezry. He kept the total industry volume forecast at 593,302 units for 2016, a contraction of 11% from 2015's sales.
Between January and August, vehicle sales have declined 14.8% to 370,242 units when compared to the same period last year, according to data from the association.
The trade group, which represents more than a dozen of manufacturers, importers and retailers, said it expects introduction of new models and further campaigns to drive sales in September. MAA has previously projected sales of 580,000 units for this year.
DRB-Hicom's unit Proton Holdings unveiled its Persona sedan on August 23 and the company is set to launch an entry-level model this month followed by a seven-seater vehicle in October. Perodua, a unit of industrial conglomerate UMW Holdings, introduced its Bezza sedan on July 21.
"With the strong orders of Perodua Bezza and Proton Persona as well as upcoming launches of new Proton Saga and Ertiqa, we expect stronger sales volume in the remaining months," said Hong Leong Investment Bank's analyst Daniel Wong.
Vehicle sales in Malaysia, Southeast Asia's third-largest car market, have been under pressure through the past year as consumers delay or scrap purchases in an economy where growth rate has decelerated to the slowest in nearly seven years.
Gross domestic product grew 4.0% in the second quarter, the lowest rate of growth since the third quarter of 2009, and the economy will likely expand between 4.0% and 4.5% this year, according to government forecast. Inflation could accelerate to as high as 3.5% in 2016 compared with 2.1% last year.
"Although there is a strong pipeline of new models and abundant discounts and promotions, there is downside risk from the subdued macroeconomic environment on the back of rising living costs and gloomy job prospects," UOB Kay Hian wrote in an investor note.
The brokerage predicts total industry volume at 615,000 units and kept the sector's rating at Underweight, noting muted consumer spending amid competitive pressure would continue to crimp the industry's profit margin.
Shares of DRB-Hicom rose 2.1% to 1.49 ringgit while UMW Holdings gained 0.5% to 5.78 ringgit. The benchmark FTSE Bursa Malaysia KLCI ended 0.7% higher.