Civil Service Salary Revision To Benefit Auto Sector, 2024 TIV Revised Upwards To 750,000 - AmInvestment Bank

KUALA LUMPUR, Aug 13 (Bernama) -- The upcoming civil service salary revision will be highly beneficial for the automobile sector as 1.5 million civil servants will have higher consumer purchasing power and become more bankable, said AmInvestment Bank.

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

“Higher salaries automatically mean better indebtedness ratio and we believe the auto financiers will be happily approving 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 today, 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 per cent to 43 per cent by the end of the year. The final details will be announced on Aug 16, 2024.

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

It also raised MBM Resources’s earnings forecasts for the financial year (FY) 2024 to FY2026 by 3.0 per cent, 5.2 per cent and 3.7 per cent, 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.

-- BERNAMA