KUALA LUMPUR: Kenanga Research has raised its 2024 total industry volume (TIV) projection for the automotive sector by four per cent to 740,000 units from 710,000 units, in line with the forecast of Malaysia Automotive Association (MAA).

In a note today, the research firm believed the boatload of new electric vehicle (EV) launches and the recent cut on EV road tax would help spur the demand for electric vehicles.

"Recall that current EV lineups are all imported and have a RM100,000 regulated floor price, as well as a limitation on the number of units distributed per month.

"On the other hand, we believe while it will be business as usual for the affordable segment, fuel subsidy rationalisation is more likely to hurt the demand for mid-market models, giving rise to a two-speed automotive market locally in 2024," it said.

Kenanga Research opined that in the affordable segment, its target customers, such as the B40 group, will be spared the impact of the impending fuel subsidy rationalisation and could potentially benefit from the introduction of the progressive wage model.

However, it added the same cannot be said for the mid-market segment as its target customers, the M40 group, might hold back from buying a new car upon the introduction of the fuel subsidy rationalisation.

"In general, the industry's earnings visibility is still good, backed by a booking backlog of 200,000 units as at end-May 2024.

"More than half of the backlog is made up of new models, alluding to how appealing new models are to car buyers. This trend is likely to persist throughout 2024 given a strong lineup of new launches," it added.

The research house also believed that a new car is still an affordable luxury for most Malaysian households due to strong consumer confidence, affordability and attractive new models despite the high inflation and a slowing global economy.