KUALA LUMPUR (Jan 28): After a record-breaking 2024, the Malaysian automotive sector is expected to record softer a total industry volume (TIV) this year due to a lack of catalysts to sustain the current elevated sales levels, according to analysts.

RHB Research forecasted TIV, which tracks new vehicle registrations, to decline by 11% year-on-year to 730,000 units in 2025, down from 816,747 units in 2024, citing high base effects as a key factor.

The research house said it does not anticipate any "compelling factor" to maintain auto sales at record levels, according to its note on Tuesday.

“We remain cautious in our outlook due to the ongoing price competition in the non-national segment and softening order backlogs. Uncertainties over the implementation of a luxury tax and petrol subsidy rationalisation also continue to persist,” RHB said, maintaining its “neutral” rating on the sector.

For the electric vehicle (EV) segment, RHB expects continued growth in sales, particularly as the exemption of import and excise duties for fully imported (CBU) EVs is unlikely to be extended beyond end-2025.

However, it noted that the local EV market remains relatively small and the anticipated surge in EV sales this year "will not meaningfully move the TIV needle".

In a separate note, TA Securities, which maintained its "overweight" recommendation on the automotive sector, upheld its 2025 TIV forecast of 700,000 units.

The research house noted that the Malaysian Automotive Association (MAA) has advocated for an extension of current tax breaks for CBU EVs until 2030 to support the country’s EV adoption target of 15% by that year.

Meanwhile, locally assembled (CKD) EVs enjoy exemptions from excise duty and sales tax until December 31, 2027, it noted.

For strategy, RHB and TA Securities favour Sime Darby Bhd (KL:SIME) and Bermaz Auto Bhd (KL:BAUTO), assigning a "buy" call on both.

RHB highlighted Sime Darby’s extensive EV portfolio as a key advantage in navigating the potential rationalisation of RON95 fuel subsidies.

The research house set a target price (TP) of RM3.15 for Sime Darby, while TA Securities pegged its TP on the stock at RM2.74.

“Its (Sime Darby's 38%) stake in Perodua also provides earnings protection amidst intensifying competition among the non-national marques,” RHB said. 

For Bermaz Auto, RHB assigned a TP of RM2.30, with TA Securities valuing the stock at RM2.05.

Malaysia's TIV reached an all-time high of 816,747 units in 2024, surpassing the previous record of 799,821 units set in 2023. In comparison, TIV stood at 720,658 units in 2022.

National carmakers Proton and Perodua continued to dominate the market, capturing a combined 62% share of Malaysia’s TIV in 2024.

On its part, the MAA sees TIV normalising to 780,000 units in 2025, representing a 4.5% year-on-year decline. This adjustment is seen as a “soft landing” following years of high backlog orders.

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