KUALA LUMPUR (March 6): CIMB Securities expects car sales to drop 7% in 2025, below the industry’s projected 780,000 units, mainly due to the introduction of targeted subsidies for RON95 fuel in July 2025.

CIMB Securities expects total industry volume (TIV) to fall 7% to 760,000 in 2025, while the Malaysian Automotive Association (MAA) expects it to fall 4.5% to 780,000 units for the year.

The firm said heightened competition is also expected in the premium segment this year.

CIMB Securities said demand will remain resilient in the mass market segment though, with supportive government policies to sustain momentum in the automotive sector.

It expects national brands to maintain their dominance, capturing a projected 64.5% market share, compared with 35.5% for non-national brands in 2025.

CIMB Securities said the sector's current valuation discount reflects weak earnings growth and uncertainty around targeted subsidies for RON95, but it offers an attractive 7.3% dividend yield for CY2025.

Price-to-earnings (P/E) ratio for the sector currently stands at 9.1 times, which is lower than its five-year average of 11.7 times.

Sime Darby Bhd (KL:SIME) is its top pick for the sector given its diversified earnings base.