Therefore, the investment bank has revised the total industry volume (TIV) for 2024 upwards to 750,000 from the previously projected 740,000.

“Higher salaries automatically mean a better indebtedness ratio, and we believe the auto financiers will be more willing and happily approve new loan applicants.

“We believe Perodua and Proton will enjoy greater demand as these are the most popular brands among civil servants,” it said in a sector update report, adding that the other brands are unlikely to see any meaningful improvements.

Previously, communications minister Fahmi Fadzil gave a teaser that salaries for civil servants will be raised by 15% to 43% by the end of the year.

The final details will be announced on Friday.

AmInvestment Bank said the key beneficiaries are MBM Resources (which owns 20% of Perodua), Sime Darby (which owns 38% of Perodua), and DRB-Hicom which has a 50% stake in Proton.

It also raised MBM Resources’ earnings forecasts for the financial year of 2024 (FY2024) to FY2026 by 3%, 5.2% and 3.7%, respectively, on expectations that the civil servants’ salary review will boost car sales, especially for the affordable car segment, namely Perodua Axia and Bezza models.

The bank has maintained its “neutral” call on the sector but with an upward bias.