August official auto sales: Recovery on higher working days

Leonardo Henry Gavaza, CFA
Senior Research Manager
Research Department

Based on official industry data, August 4W sales reached 97k units (exhibit 1), up 6% m-m and 24% y-y on higher working days due to Lebaran festivity in July.  For the same reason, 2W sales also improved to 609k units, up 14% m-m and 25% y-y (exhibit 2).

Astra International (ASII) booked August sales of 47k units, up 1% m-m and 22% y-y, reflecting lower market share of 49% (July 2014: 51%; August 2013: 50%). At the same time, Nissan (excluding Datsun) reported August sales of 2.5k units, up 1% m-m but down 44% y-y. More positively, Honda booked strong August performance of 15k units, up 14% m-m and 255% y-y, on strong Mobilio sales.

ASII’s 2W Honda brand had August sales of 388k units, 19% higher m-m and an increase of 32% y-y, translating to improved market share of 64% (July 2014: 61%; August 2013: 50%). For Yamaha, August sales reached 183k units, an increase of 6% m-m and 20% higher y-y.

We believe aggressive marketing in the low MPV segment will mean margin contraction for ASII, while several new dealership developments could bring down IMAS’s margin. We expect improved 4W sales volumes in September due to the Indonesia International Motor Show (IIMS) exhibition. With more new models to be launched, we expect continued margin pressure for ASII and limited market share for IMAS.

While the auto sector should experience solid volume growth, we retain our UNDERWEIGHT stance on lower average selling prices and margins, given fierce competition. Additionally, ahead of the government’s fuel price hike, we expect interest-rate sensitive sector like automotives to remain out of favor and underperform the the market (exhibit 4).