National Marques To Expand Market Dominance Due To Increasing Demand For Affordability

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BASED on Kenanga Research (Kenanga)’s total industry volume (TIV) forecast of an unchanged 805k units for calendar year 2025 (CY25), they estimate that national marques will expand their market dominance to 62% of CY25 TIV compared to 58% of TIV in CY22.
This is due to the increasing demand for the affordable vehicles, displacing the non-nationals marques’ market share on which their target focus is mostly in the RM100k and above vehicles segment. 
This was evident in Kenanga’s stock coverage over the quarter four (4Q) CY24 results season, and they believe the heavyweights under their coverage are experiencing valuation de-rating due to intense competition in the non-nationals space. 

“If the intense competition continues where there will be mass localisation of foreign brands and market share becomes more fragmented, this may also weigh on valuation for others such as SIME due to its exposure to various luxury brands as well as mid-market segments,” said Kenanga in the recent Sector Update Report.
However, SIME fared better than BAUTO as a proxy to the national marques via its 38% stake in Perodua as well as expected recovery in its China business with the phasing out of competitors and China government’s initiatives to boost their domestic market demand due to various import tariff restriction imposed on them. 
A two-speed automotive market locally will persist into CY25. It will be business as usual for the affordable segment as its target customers, that is the B40 and lower tier M40 groups, will be spared the impact of the impending RON95 subsidy rationalisation and could also potentially benefit from the introduction of the progressive wage model.

Kenanga’s CY25 TIV forecast of 805k units (-1% YoY) will be driven by the forward buying interest on the deferment of new excise duty regulations to end-2025 of which they expect Perodua to benefit the most at 44% TIV market share with the highest localisation rate as well as attractive new launches, higher household income and a stable labour market.— Focus Malaysia

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