August official auto sales: Weak on fewer working days

by Leonardo Henry Gavaza

Bahana Securities Research Analyst (Jakarta Post today)

Based on sales figures released by Gaikindo (4W Association) and AISI (2W Association), August 4W sales of 77,961 units were down 31% m-m but up 2% y-y, with 2W sales of 488,983 units down 30% m-m but up 14% y-y (exhibits1 & 2), due to fewer working days in August on the back of Lebaran holidays.

ASII booked monthly sales of 38,776 units, down 33% m-m and 2% y-y, reflecting a smaller market share of 49.7% (Jul-13: 51.2%; Aug-12: 51.7%).  This is partly caused by Mitsubishi’s strong sales of 10,847 units, down 25% m-m but up 14% y-y, helped by strong commercial segment (trucks and pickups) sales, and Suzuki’s 12,006 units, down 29% m-m but up 19% y-y due to high demand for the Ertiga model.  For Nissan, we see 15% lower y-y sales to 4,500 units on tight competition.

Over to 2W: Honda’s August sales reached 294k units, down 29% m-m but up 12% y-y, while Yamaha sales increased to 153k units, down 33% m-m but up 15% y-y.  In 8M13, Honda market share reached 60.1%, higher than 8M12’s level of 57.5%.

Outlook: Fuel price hike to harm short-term auto sales

Although a LCGC policy has been enacted, auto sales will still experience a hard time on the back of the recent average 33% fuel price hike, back in June.  We expect 2014 4W sales to be around 1m units, with 2W sales of 7m units, on higher inflationary pressures.  We expect monthly car sales volume to rebound in September, due to Indonesia International Motor Show event and the launching of several low cost green car (LCGC) models, before weakening in the next few months, as inflation peaks during the period.  Additional pressure on monthly car sales volume will come from increased car average selling price, which we expect will come to pass next month, in line with weaker Rupiah over the last few months. 

Recommendation & valuation: Reduce on ASII & IMAS

As higher sales from LCGC segment on new tax incentive policy are unlikely to offset the effect of overall sales depressed by higher fuel prices and increased selling price on the back of weaker Rupiah, we retain sector UNDERWEIGHT.  At this stage, we have REDUCE ratings on both ASII, due to falling margins and unexciting short-term auto sales prospects, and IMAS, on more intense competitive landscape in its MPV and low Hatchback segments.

Exhibit 1. 4W sales summary

	Indonesia		Astra			Honda		Mitsubishi		Suzuki		Nissan
	Units (000)	y-y (%)	Units (000)	y-y (%)	Mktshr (%)	Units (000)	y-y (%)	Units (000)	y-y (%)	Units (000)	y-y (%)	Units (000)	y-y (%)
Aug-13	78	2.0	39	(1.8)	49.7	4	(17.4)	10	14.1	12	18.6	5	(15.2)
Jul-13	112	9.4	57	6.0	51.2	9	13.6	14	13.7	17	27.2	6	(9.2)
8M13	792	10.9	417	5.6	52.7	62	60.9	102	6.7	104	39.4	42	(9.3)

Source: Gaikindo

Exhibit 2. 2W sales summary

	Indonesia		Honda			Yamaha		Suzuki
	Units (000)	y-y (%)	Units (000)	y-y (%)	Market share (%)	Units (000)	y-y (%)	Units (000)	y-y (%)
Aug-13	489	13.9	294	12.4	60.2	153	15.0	32	30.3
Jul-13	702	21.3	416	20.8	59.1	230	24.3	42	7.7
8M13	5,115	8.6	3,074	13.5	60.1	1,660	1.9	283	(1.2)