RHB remains positive on Bermaz Auto’s plans to refresh Kia brand

KUALA LUMPUR: RHB Research remains bullish on Bermaz Auto Bhd because it plans to refresh the Kia brand and improve its after-sales service following its appointment by the client.

The research house, which has a “buy” appeal on Bermaz, noted that the retailer’s strategy is to position the brand to avoid competition with more established brands.

“Kia Malaysia has indicated that it does not view Kia as a mainstream product, which we believe helps avoid fierce competition with national brands.

“We believe Kia’s exciting new car lineup will appeal to the customer segment between domestic brands and Japanese brands,” it said in a statement.

Following the recent launch of the seven- and eight-seat CKD variants of the Kia Carnival, RHB said Bermaz management was optimistic about strong pre-bookings for the vehicle, which is one of several new Kia vehicles in the lineup.

He noted that at a starting price of RM231,000, the Kia Carnival is a cheaper alternative to the Toyota Vellfire/Alphard.

“For now, 33%-owned Kia Malaysia will still import the 11-seater Kia Carnival CBU due to local production constraints and supply chain issues.

“However, Kia Malaysia plans to produce up to 5,000 units of the Kia Carnival pa, both for domestic consumption and for export to Asean markets.

“Once production capacity can meet demand, it will stop importing CBUs. At least 40% of cost content will be domestic to meet requirements, he added.

RHB said there has been a strong backlog for the Mazda, Kia and Peugeot brands since late June, but orders slowed significantly in July, as expected.

He estimates a total current backlog of around 12,000 orders for the three brands.

RHB is also more optimistic about Bermaz’s social responsibility initiatives, prompting it to increase its environmental, social and governance (ESG) premium from 2% to 4%, resulting in a target price increase of RM2.35.

In the spirit of social responsibility, Bermaz is using the underutilized capacity of the Inokom plant to manufacture the Kia Carnival CKD in order to create jobs in and around Inokom through downstream activities and to minimize additional investments, with additional investment for CKD operations of around RM30 million, he said. .

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