Kenanga Investment Bank has revised upwards its total industry volume (TIV) forecast for the automative industry this year by eight per cent to 500,000 units.
It attributed the improved projection to a strong sales momentum and anticipation of better sales with the line up of new models in the second half of the year and improved consumers' sentiment.
The new forecast is similar to what the Malaysian Automotive Association (MAA) has estimated for the year.
Difficulties in obtaining car loans could however pose a risk, Kenanga Investment said in its research paper released here today.
"We also expect the strong sales momentum to continue up to Hari Raya before coming off towards the year end," it added.
The TIV currently stands at about 60.6 per cent of the projected figure by MAA and Kenanga Investment.
Kenanga Investment said a positive re-rating of the automotive sector should happen next year with the faster and stronger-than-expected recovery of the economy and greater stability in the employment market.
"We expect automotive companies to report commendable earnings in the second half as we anticipate sustained sales momentum.
Less volatile currency movements and a stronger ringgit against the dollar and yen is also expected to lend some comfort to margins," said the bank.
On the revised National Automotive Policy (NAP), which is expected to be unveiled next month, the bank said it would most likely focus on consolidating sales network, development of the automotive parts and components and as well as on the approved permit issue. -- Bernama
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