Fuel subsidy expansion brings stability to mid-market automotive segment

 

KENANGA’s calendar year 2025 (CY25) total industry volume (TIV) forecast is 805k units, driven by strong sustained demand in the affordable segment.

Also, note the fuel subsidies being expanded to all Malaysian which partly remove the uncertainty in the mid-market segment, forward buying interest as the new OMV excise duty regulations will be implemented gradually starting 2026.

EV’s imported complete build-up incentives will be discontinued in 2026, in which Kenanga expects Perodua to benefit the most at 48% TIV market share, attractive new launches, higher household income and a stable labour market.

Kenanga expects gradual transition to battery electric vehicles which currently enjoys SST exemption and other EV facilities incentives up until 2025 for imported complete build-up (CBU) and 2027 for locally-assembled complete knockdowns (CKD).

“Looking further, we also have a nuanced view of EV adoption eventually picking up and gasoline demand will eventually peak, but we do not think that will happen in the next five years due to infrastructure challenges,” said Kenanga.

This new petrol subsidy mechanism, in Kenanga’s view, could make the transition even slower than earlier expected as the middle- and lower-income group now have less incentive to switch from ICE to EV for the time being. 

Malaysia aims for electric vehicles (EVs) to represent 20% of new vehicle sales by 2030, with longer-term vision extending it to 80% by 2050 (including hybrids vehicles). 

The number of proposed charging stations is currently at 4,477 (5,149 built to date). 

The high installation costs of EV chargers and the lengthy approval process for charging facilities are key challenges faced by the government in achieving its target of 10,000 electric vehicle charging stations nationwide by end-2025. — Focus Malaysia