KUALA LUMPUR (Jan 14): After a year of adjustment, Southeast Asia’s auto sector in 2026 is shifting from rapid growth to sustainable development. Chinese automakers, once new entrants, are now shaping consumer expectations and competition beyond just price, says Carsome group chief business officer Aaron Kee.

“Technology integration, cabin experience and feature richness are increasingly embedded into propositions, even within mass-market vehicles,” he noted.

As a result, this raised baseline consumer expectations. Buyers in Southeast Asia are assessing vehicles less on headline pricing alone and more on the overall user experience on offer.

This recalibration is pushing the industry to prioritise specification and usability to remain competitive, adding on four other trends shaping the Asean market in 2026, Kee said.

The adoption of "XEVs" — which includes hybrids, plug-in hybrids and battery electric vehicles — remains uneven across the region.

Singapore leads the region, with over 70% of new vehicle registrations being electrified vehicles while Thailand and Vietnam recorded adoption rates of around 30%, reflecting stronger ecosystem readiness and wider model availability.

In Malaysia, electrified vehicles account for just 4% of new registrations, leading the Philippines by narrow margins (3.8%) but falling significantly behind Indonesia’s 18% adoption rate.

In Malaysia, adoption for EV remains modest compared to some regional peers, also due to the affordable RON95 petrol price and ongoing charging infrastructure constraints. This makes internal combustion engine (ICE) vehicles the practical choice for the majority.

Adoption in Malaysia, Indonesia and the Philippines is expected to remain measured as consumers take a more pragmatic approach to the transition,” Kee noted.

While continuing to grow slowly, the focus for consumers in Malaysia, Indonesia and the Philippines has shifted away from awareness and incentives towards practical considerations such as charging access, long-term ownership costs and resale expectations.

Despite consistent consumer interest in vehicle ownership, the gap between demand and completed transactions is likely to persist into 2026.

Kee highlighted that the challenge for car ownership is not demand but financing, as lenders continue to take a cautious approach in response to asset risk, approvals are expected to remain selective.

“Rather than stepping away from the market, many will recalibrate expectations and gravitate toward price segments that feel more manageable. This pattern is likely to remain visible across markets such as Malaysia and Indonesia, where affordability remains a key consideration, as well as Thailand, where demand has increasingly clustered around financeable price points,” Kee added.

As financing conditions tighten, affordability remains the most significant driver of consumer behaviour.

As a result, vehicle sales growth in 2026 is expected to be driven less by pushing buyers up the price curve and more by offering options.

The final trend reshaping the market is the shorter vehicle ownership cycles. Rapid product refreshes and more frequent model upgrades mean that younger vehicles are entering the trade-in and resale pool much earlier than in the past.

Interestingly, age has become a less reliable indicator of value.

“As more models enter the market at shorter intervals and buyer preferences evolve more quickly, trade-in pricing has become more sensitive to model relevance and demand than to mileage or registration year,” Kee said.

This has resulted in a more dynamic trade-in environment. Newer vehicles continue to offer strong condition and specifications, while pricing reflects how well a model aligns with current market preferences.