KUALA LUMPUR (Dec 30): The Malaysian automotive sector's total industry volume (TIV) is expected to grow to 805,000 units in 2025 for another record year for vehicle sales, said Kenanga Investment Bank.

In a note on Monday, Kenanga said the growth was attributed to the expansion of the volume-driven affordable vehicle segment, attractive new model launches, and a growing market share for Chinese automakers through localised production schemes.

“We also expect another deferment of new excise duty regulations, which could have increased locally assembled vehicle prices by 8%-20%, alongside higher household income from salary adjustments for government servants, increased minimum wages, and a stable labour market that could sustain the vehicle demand for another record year,” Kenanga said.

The research house cites Perodua and Proton as key growth drivers in the national segment, thanks to their affordability and specifications.

Kenanga further noted that Perodua will introduce two new models in 2025 — the D66b and its first electric vehicle (EV), both priced under RM100,000.

The research house maintained its "overweight" call on the sector, on the back of robust earnings visibility supported by a 150,000-unit booking backlog as of end-2024, with more than half comprising new models.

Kenanga highlighted EV growth, supported by the government’s push to double charging stations to 10,000 by calendar year 2025 (CY2025) and its target for EVs and hybrids to account for 15% of TIV by CY2030 and 38% by CY2040.

Meanwhile, a mid-term review of the National Automotive Policy is expected to include hybrid vehicles as a transition step towards achieving these targets.

Kenanga's top picks for the sector remain MBM Resources Bhd (KL:MBMR) and Hong Leong Industries Bhd (KL:HLIND). MBM is favoured for its strong earnings visibility, backed by Perodua’s order backlog of over 90,000 units, and an attractive dividend yield of 7%.

Besides, Hong Leong Industries stands out for its market-leading Yamaha motorcycles, which cater to the booming gig economy, and its dividend yield of 5%.