WEAKER SALES SEEN FOR MALAYSIAN AUTO SECTOR IN 2025

KUALA LUMPUR, March 21 (Bernama) -- The Malaysian automotive sector is expected to see weaker sales in 2025.

Hong Leong Investment Bank Bhd (HLIB) expects the sector’s total industry volume (TIV) to normalise to 750,000 units in 2025, a decline of 8.2 per cent year-on-year (y-o-y), compared with the Malaysian Automotive Association’s (MAA) forecast of 780,000 units.

“Our top picks are MBM Resources (Buy, target price (TP): RM7.40) and Sime Darby (Buy, TP: RM2.65) due to the group’s leverage on the more sustainable Perodua sales volume. Meanwhile, the entrance of several new electric vehicle (EV) players into the market continues to pose a threat to non-national original equipment manufacturers (OEMs) due to their attractive pricing,” it said in a note.

Nevertheless, the bank noted that there is still upside potential from exciting new model launches in late 2024 and 2025, as well as more aggressive sales and marketing activities by various OEMs to sustain sales.

HLIB has maintained a “neutral” call for the sector.

Kenanga Investment Bank Bhd expects the TIV for 2025 to reach 805,000 units, a slight 1.0 per cent decline y-o-y, driven by forward-buying interest due to the deferment of new excise duty regulations until end-2025.

“(Nevertheless) we expect Perodua to benefit the most, with a 44 per cent TIV market share, thanks to the highest localisation rate, which could have resulted in prices of locally assembled vehicles increasing by 10-30 per cent, as well as attractive new launches, including the Perodua hybrid, Perodua EV, and an all-new Perodua Myvi.”

The bank added that a “two-speed” automotive market is expected to persist in 2025.

“It will be business as usual for the affordable segment, as its target customers – the B40 and lower-tier M40 groups – will be spared the impact of the impending RON95 subsidy rationalisation and could potentially benefit from the introduction of the progressive wage model.

“However, the same cannot be said for the premium segment. Its target customers, the upper-tier M40 and T15 groups, may hold back from buying new cars, down-trade to smaller cars, or switch to hybrids and EVs to reduce their fuel expenses following the introduction of fuel subsidy rationalisation,” it said.

Kenanga Investment Bank has maintained an “overweight” call for the sector.

RHB Investment Bank Bhd anticipates weaker year-on-year TIV in the first quarter (1Q 2025), supported by a decline in order backlogs, following the record-high TIV achieved last year.

“As YTD TIV has been exceptionally weak (-14.3 per cent y-o-y), we believe the TIV for 1Q 2025 will decrease year-on-year, supporting our expectation of a cyclical downturn in the sector, compounded by tapering order backlogs for major carmakers.

“We expect the TIV in March to increase month-on-month, driven by carmakers ramping up sales through aggressive festive season promotions ahead of Aidil Fitri in April,” it said.

The bank has maintained a “neutral” call for the sector, citing a lack of catalysts to drive sales and earnings to new highs.

-- BERNAMA