“We see a few compelling factors for 2024 automotive sales in breach of another high.

“We think the strong TIV performance in 2022 and year-to-date (YTD) 2023 reflects pent-up consumer discretionary demand left over from 2020 and 2021.

“Our 725,000 TIV forecast for 2023 implies a four-year average annual TIV of 621,000 units, which is largely in line with the 10-year pre-pandemic average of 618,000 units,” it said in a note today.

On top of that, RHB Research said gross loans for the purpose of purchasing transport vehicles rose 7.6% and 6.3% year-on-year (y-o-y) in 2022 and YTD-August 2023, while TIV rose by 41.6% and 11.6% in 2022 and YTD-August 2023.

The research house also said that these numbers suggest that vehicle purchases for the past two years were mainly for lower-priced models like the Perodua Myvi and Axia, as well as Proton Saga.

“We remain cautious on car sales performance in 2024, given the uncertainty and lack of catalysts.

Key downside risks include softer-than-expected orders and deliveries, as well as resurgent supply chain issues,” it said.

Meanwhile, MIDF Research has maintained its “neutral” call for the automotive sector in the near term, as it believes the strong TIV numbers this year have largely played out, while order backlog growth seems to have peaked with initial signs of receding.

It identifies Bermaz Auto Bhd and MBM Resources Bhd as the sector’s top picks, which are currently trading at around 30% discount to the mean price-earnings ratio, MIDF Research said.

As at 3.50pm, Bermaz’s share price was up by two sen (0.81%) at RM2.50, giving it a market capitalisation of RM2.92 billion.

As at 3.26pm, MBM’s share price was flat at RM3.85, valuing the company at RM1.5 billion.