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Analysis: Monthly auto sales: Feeble February
Based on sales figures released by Gaikindo (four-wheeler association) and AISI (two-wheeler association), February four-wheeler sales slumped to 88,700 units, down 21 percent year-on-year (yoy) and 6 percent month-to-month (mom), with two-wheeler sales reaching 556,000 units, down 18 percent yoy but up 11 percent m-m (tables 1 and 2)
Change Size
Based on sales figures released by Gaikindo (four-wheeler association) and AISI (two-wheeler association), February four-wheeler sales slumped to 88,700 units, down 21 percent year-on-year (yoy) and 6 percent month-to-month (mom), with two-wheeler sales reaching 556,000 units, down 18 percent yoy but up 11 percent m-m (tables 1 and 2).
PT Astra International Indonesia (ASII) saw weak February sales of 43,500 units, down 28 percent yoy and 1 percent mom, with sales of Avanza and Xenia struggling to improve on soft demand and intense competition from the Honda Mobilio. With support from the new Xtrail model, Nissan ' which is sold by PT Indomobil Sukses Internasional (IMAS) ' booked monthly sales of 3,400 units, down 20 percent yoy but up 87 percent mom, while ASII's Honda booked solid sales of 13,700 units, up 15 percent yoy but down 19 percent mom, helped by firm sales from the HRV and Mobilio.
Unlike its four-wheeler brand performance, Honda two-wheeler sales reached 377,000 units, down 11 percent yoy but up 11 percent mom, with a stable mom market share of 67.8 percent (67.6 percent in January 2015; 62.4 percent in February 2014). Yamaha monthly sales were even worse, coming in at 151,000 units, down 30 percent yoy but up 8 percent mom.
Based on our channel checks, the local discounting trend has intensified in March (table 3), despite the stronger dollar operating environment. With some experts expecting the launch of the new Toyota Innova in the third quarter (Q3) of this year, discounts on the model have risen significantly to Rp 25 million (9 percent), with some dealers still selling 2014 stock at even deeper discounts of around Rp 35 million (13 percent). We expect these conditions to continue to pressure margins for automotive companies.
The Honda HRV has started 2015 strongly, booking February monthly sales of 3,900 units, much higher than the usual SUV market leaders, the Toyota Rush (799 units) and the Daihatsu Terios (913 units). Demand for the HRV remains strong, with an order backlog of around three months. ASII's MPV market share declined in 2014, eroded by the Mobilio launch, and we expect a similar situation to materialize in the SUV segment due to Honda's HRV launch in January 2015.
Due to expected flat four-wheeler sales volumes in 2015, we look for weak margins to persist on intensifying competition, as several leading brands, such as Toyota (ASII), Daihatsu (ASII) and Honda will likely reinvent their products to gain market share. We expect aggressive marketing in the multipurpose vehicle (MPV) and SUV segments, leading to market-share erosion and margin pressure for ASII, while several new dealership developments should lead to pressure on IMAS's margins, particularly given the weak rupiah.
In summation, as we expect a reversal on several policy risks and poor monthly four-wheeler and two-wheeler sales through the second quarter of this year due to weak demand, we retain our underweight sector call.
The writer is a senior research manager at Bahana Securities' research department.
