KUALA LUMPUR (March 27): Elevated crude oil prices are expected to accelerate Malaysia’s shift towards electric vehicles (EVs), particularly among premium internal combustion engine (ICE) vehicle buyers, said CIMB Securities.
The research house expects national EV penetration to increase throughout 2026, supported by the launch of the Proton e.MAS 5 and e.MAS 7 plug-in hybrid electric vehicle (PHEV) variants.
The growth is further underpinned by the continuation of tax incentives for completely knocked-down (CKD) EVs.
Meanwhile, despite reliance on petroleum-based segments, national car manufacturers have shown resilience, with limited downside risk despite the ongoing conflict in Iran, it added.
"We believe the tightening of the Budi95 monthly individual quota will have a limited impact on the national segment," said CIMB Securities in a note on Friday, noting that most national models are equipped with smaller engine capacities and have lower fuel consumption.
While February 2026 saw total industry volume (TIV) fall 19% year-on-year to 52,414 units due to a shorter operating month and Chinese New Year celebrations, the year-to-date TIV for the first two months of 2026 grew 1.5% year-on-year to 116,712 units.
“Our 2026F TIV forecast of 800,000 units is underpinned by a resilient demand for national brands and rising EV penetration,” the research house said, noting that it remains slightly ahead of the Malaysian Automotive Association’s projection of 790,000 units.
Within the market, Proton emerges as a significant driver of growth, with its sales volume surging 60% year-on-year in the first two months of 2026. This performance helped the national segment's market rise by more than 71.0%, from 65.5% in the previous year.
Conversely, the non-national segment, which includes BYD, Jetour, and more, saw a decline in volume, though these Chinese brands continued to gain traction.
CIMB Securities said potential catalysts for the sector include a strengthening ringgit and potential interest rate cuts.
“Downside risks to our call include further depreciation of the ringgit versus the US dollar and Japanese yen, potential interest rate hikes, tightening access to credit from financial institutions, and margin erosion from intensifying market competition,” the research house added.
CIMB Securities maintains a 'neutral' call on the Malaysian automotive sector, citing a subdued growth outlook and intensifying competition.