Lemon Law Introduction Set To Boost Market Confidence - RHB Investment Bank

KUALA LUMPUR, Oct 11 (Bernama) -- The proposed inclusion of Lemon Law under the Consumer Protection Act 1999, which will protect buyers from purchasing defective vehicles, is broadly positive for market confidence as it could encourage consumers to consider new automotive brands, according to RHB Investment Bank Bhd.

It said Proton and Perodua are among the brands that are well positioned to comply given their scale, after-sales network and quality systems.

“Overall, we view the move as structurally positive for the sector, as it improves transparency and raises industry standards,” it said in a note today.

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On Friday, Prime Minister Datuk Seri Anwar Ibrahim announced in the Budget 2026 presentation that the government will introduce amendments to the Consumer Protection Act to include Lemon Law elements to ensure protection for consumers.

RHB Investment Bank maintained its neutral rating for the automotive sector mainly due to weaker total industry volume (TIV) expectations, as sales volume normalisation takes place in the second half while intensifying competition in the non-national segment persists.

“We also do not anticipate any near-term re-rating catalysts for the sector to boost TIV sales to record highs,” it added.

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Meanwhile, Kenanga Investment Bank viewed the decision to remove excise duty exemptions on completely-built-up (CBU) electric vehicles (EVs) as positive to national brands, which already have higher localisation rate as well as government additional rebates on the purchase of national cars.

It said that starting Jan 1, 2026, imported CBU EV duty is set to rise 30 per cent to 100 per cent (reinstated import tax at 10 per cent to 30 per cent of the car’s price and excise duty at 50 per cent to 100 per cent).

"Coupled with the luxury vehicle tax exemption limit in Langkawi and Labuan, this could motivate forward purchases which are in line with Kenanga target’s of above 800,000 units of TIV sales for this year.

“Moreover, we also expect forward buying interest on the lack of clarity on the new excise duty regulations (that could have resulted in prices of locally assembled vehicles increasing by 10−30 per cent) expected to commence on Jan 1, 2026,” it added.

-- BERNAMA