The weak outlook for Malaysia’s automotive sector has prompted TA Research to downgrade auto stocks on Bursa Malaysia.
The research house downgraded its auto sector rating to “underweight” from “neutral”, driven by a lack of near-term catalysts to reverse the current overpriced valuation.
“Our 2025 total industry volume (TIV) forecast remains at 750,00 units, representing an 8.2% year-on-year (y-o-y) decline, underscoring the cautious outlook for the automotive sector,” it said in a sector report today.
Year to date, the TIV stands at 516,862 units (-4% y-o-y), reflecting overall cautious market sentiment, it said.
It said “intense price competition is expected to pressure margins”, suggesting that market share gains by brands are likely achieved at the expense of profitability.
TA downgraded Sime Darby Bhd to a “sell” from “hold” while maintaining its “sell” recommendations on Bermaz Auto Bhd and MBM Resources Bhd.
It lowered its target price for Sime Darby to RM1.97, Bermaz Auto (51 sen) and MBM (RM4.31). Sime Darby’s shares closed at RM2.10, Bermaz Auto at 66 sen and MBM at RM5.19.
According to the Malaysian Automotive Association (MAA), the TIV for August stood at 73,000 units, up 4.2% month-on-month (m-o-m) from 70,100 units in July.
The stronger performance was attributed to higher stock availability from July’s robust production of 71,400 units, aggressive promotions during the Merdeka celebration month, and the sales impact from new model launches.
Total national passenger vehicle sales in August were largely stable at 46,700 units, which was almost flat compared to July.
Non-national passenger vehicles sales rose 16.2% m-o-m to 20,700 units in August, supported by Honda (+23.7% m-o-m), Mazda (+33.9%), Volkswagen (+26.6%), and others (+24.5%), while Nissan dipped slightly (-7.7%).
On a y-o-y basis, non-national sales increased 3.6%, led by Volkswagen (+20.7%) and others (+45.4%), and was offset by weaker performance from Honda (-20.5%) and Mazda (-22.9%). Year to date, non-national sales totalled 149,500 units (-4.3% y-o-y).
Sime Darby’s auto business, operated by Sime Motors, is involved in the import, assembly, distribution, and retail of vehicles from brands like BMW, Rolls-Royce, Porsche, Hyundai, Ford, and Chinese electric vehicle (EV) giant BYD.
Bermaz Auto assembles and distributes Mazda and Kia vehicles and also sells XPeng EVs from China. Automotive-parts maker MBM has dealerships for Perodua, Daihatsu, Hino, Volkswagen and Volvo.
