KUALA LUMPUR (Jan 21): Malaysia's automotive sector total industry volume is expected to normalise to a three-year low of 780,000 units this year, according to the Malaysian Automotive Association’s (MAA) projection, having hit a record 816,747 units in 2024.
The projected 4.5% year-on-year decline is a "soft landing" after several years of high backlog, said the association president Mohd Shamsor Mohd Zain at a press conference following the Motor Traders and Manufacturers Performances briefing for 2024.
“Still, the projection of 780,000 units is quite high, and the target is realistic for the industry,” said Mohd Shamsor.
In 2024, sales of new motor vehicles rose 2.1% year-on-year to surpass the 800,000-unit threshold high, propelled mainly by the passenger cars sub-segment and stronger domestic demand overall.
TIV or vehicle registrations increased to a record 816,747 units during the year under review, surpassing the previous record of 799,821 units achieved in 2023. In 2022, total TIV came in at 720,658 units.
The year 2024 also booked the highest monthly TIV ever, with December sales at 81,735 units, surpassing the 80,000-unit mark for the first time. The previous record was 78,895 units achieved in March 2023.
Nonetheless, among downside risks to the forecast include the uncertainty surrounding the US-China trade war, which would impact the country’s economic prospects, Mohd Shamsor said.
The potential petrol RON95 subsidy rationalisation exercise is also expected to impact sales of higher engine capacity vehicles. But this may encourage sales of electrified vehicles, he added.
“The petrol subsidy rationalisation focus is on the T15 group (the top 15% income bracket). This group of people will be more prone to converting to electric or hybrid vehicles,” he noted.
On inflation, which is still seen as stubborn this year, Mohd Shamsor said it may not significantly dent demand, at least for A-segment cars. “The need for so-called mobility is important. So, I do not feel that there will be a big dent in the A segment (car sales),” he explained.
For 2025, MAA's TIV forecasts have taken the following economic and policy factors into account, among others:
- Malaysia's GDP growth forecast of 4.5% to 5.5% in 2025, with unemployment relatively stable at 3.2%;
- Overnight policy rate or benchmark interest rate seen at 3% to still be favourable towards vehicle demand;
- An increase in minimum wage to RM1,700 from Feb 1, 2025, coupled with recent public servant salary revision of up to 15%;
- Expectations of more battery electric vehicles purchase ahead of the expiry of duties exemption at end of this year; and
- Introduction of new brands and models in the market along with promotional sales strategies.