Strong Recovery Predicted for Automotive Sector by Kenanga Investment Bank for 2022
Kenanga Investment Bank Bhd has given its prediction for 2022, with total industry volume (TIV) expected to rebound by 19 per cent, from the 505,000 forecast in 2021 to 600,000 in 2022, in news reported by Bernama.
Kenanga Investment Bank Bhd Seeing Reason for Optimism for 2022
With 2020’s TIV of 505,000 units, this is a 5 per cent decline from the initial prediction of 529,434 units earlier in the year. Therefore, predicting a more buoyant recovery in car sales with the reopening of economic activities for 2022, as well as the 100 per cent sales tax exemption on completely knocked down passenger vehicles and the 50 per cent exemption on completely built-up units, including SUVs and multi-purpose vehicles for the opening half of the year.
Kenanga Investment Bank’s neutral call is based on careful analysis of the MAA figures. The organisation said of the enhanced vehicles predicted, “This includes the growing number of back-logged bookings for popular models with our 2021 TIV target at 505,000 units, tracking ahead of the Malaysian Automotive Association’s (MAA) 2021 target TIV of 500,000 units. We expect a stronger recovery next year with 2022 TIV target at 600,000 units, closely in line with the MAA’s TIV target of 605,000 units (+21 per cent).”
With the sales and service tax exemptions expected to drive the first half of the calendar year, this will drive the recovery post-lockdown. Additionally, it is expected that herd immunity being closer to being achieved, this will bring about a loosening of SOPs, which in turn will revitalise local travel.
“The easing of restrictions, as well as recovery in semiconductor chip supply, should push up the demand for passenger vehicles, especially the affordable national marques,” Kenanga Investment Bank added, although, the organisation cautiously warned, “nevertheless, for certain models, the recovery in car production could be limited by the ongoing global constraint in semiconductor chip supply.”