SIME DARBY EXPECTS TOUGH COMPETITION IN MOTORS DIVISION THIS YEAR

PETALING JAYA, Feb 24 (Bernama) -- Sime Darby Bhd expects tough competition in its motors division this year due to an over supply of vehicles from China, according to group chief executive officer Datuk Jeffri Salim Davidson. 

He noted that there is excessive production of cars particularly by Chinese original equipment manufacturers (OEMs). 

“We are seeing a bit of the export of excess capacity and the discounting that is happening in China being transferred to other markets,” he said. “It will remain challenging in China, and I think it’s becoming increasingly tougher in some of the other markets,” he said in a media briefing here today. 

Meanwhile, Andrew Basham, managing director of Sime Darby Motors, the motors division of Sime Darby, revealed that nine branches in China were closed in the first half of FY2025 (1H FY2025), with an additional two or three more closures expected in the coming months.   

For the first half year ended Dec 31, 2024, the motors division’s revenue decreased to RM17.45 billion from RM18.80 billion in the previous period, driven by lower sales volume which impacted profitabilty.  

In 1H FY2025, the motors division’s revenue for automotive operations in Malaysia stood at RM3.79 billion, China (RM6.41 billion), Australasia (RM2.64 billion), and Singapore and others (RM4.61 billion). 

The decline in the motors division’s revenue from its China automotive operations was attributed to lower sales and vehicle margins. 

Sime Darby anticipates that the renewed auto trade-in policy, lower borrowing costs, and more affordable electric vehicle (EV) models will drive growth in its motors division in China in 2025.

However, the company cautioned that ongoing challenges, including intense competition, heavy discounting, and weak domestic demand, could continue to weigh on the automotive market.

-- BERNAMA