THE proposed eligibility criteria for the T15 fuel subsidy, set to be finalised by mid-2025, could lead some consumers to reconsider their vehicle choices, potentially downgrading to more affordable internal combustion engine (ICE) models or making the switch to electric vehicles (EVs), according to MIDF Research.
In a recent note, MIDF highlighted that the anticipated policy change might encourage buyers to choose lower-cost ICE vehicles or accelerate their move to EVs, particularly before tax exemptions for fully imported (CBU) electric vehicles expire at the end of this year.
This shift could be further compounded by the revised excise duties on completely knocked-down (CKD) car components, which are set to be implemented in January 2026.
These new taxes are expected to drive up the prices of CKD vehicles by between 10 and 30 per cent, adding another layer of pressure on consumers.
Impact on Market Performance and Vehicle Choices
MIDF Research also noted that the total industry volume (TIV) in February 2025 showed a notable 30.8 per cent rise month-on-month to 63,906 units, largely due to a longer working month. However, the year-on-year (y-o-y) performance saw a slight dip of 1.7 per cent.
The February figure accounts for 14 per cent of the full-year forecast of 792,000 units, which reflects a projected 3 per cent y-o-y decline. This aligns with expectations, which have factored in a gradual easing of order backlogs in the automotive sector.
Among the key players, Honda saw a significant surge in sales, more than doubling its performance, while Perodua's sales rose by 35 per cent month-on-month.
Toyota and Proton also posted increases of 21.3 per cent and 19.4 per cent, respectively. In contrast, both Mazda and Nissan saw declines, with drops of 9.8 per cent and 16.2 per cent, respectively.
Perodua and Honda were the only manufacturers to record a year-on-year rise in TIV, with increases of 14.9 per cent and 12.6 per cent, respectively.
Looking ahead, MIDF Research expects the TIV for March 2025 to see further improvements, driven by promotional activities ahead of the Hari Raya festivities, which are expected to bolster sales.
Production and Market Trends
In terms of total industry production (TIP), February 2025 recorded 61,545 units, a month-on-month increase of 8.2 per cent, though still a 6.2 per cent drop year-on-year. The year-to-date total stood at 118,444 units, reflecting a 16.4 per cent decline from the same period last year.
MIDF maintains a "Neutral" stance on the sector, anticipating a downcycle in the market.
The expected 3 per cent year-on-year decline in TIV aligns with the Malaysian Automotive Association's own projection of a 4.5 per cent fall for the year.
Bermaz Auto Remains the Top Pick
Despite the challenges facing the automotive sector, MIDF Research continues to favour Bermaz Auto as a top pick within the industry, citing its strong performance amid market fluctuations.
The introduction of the T15 fuel subsidy criteria may drive changes in consumer behaviour, pushing buyers towards more affordable vehicle options or accelerating the transition to electric vehicles.
The impact of revised excise duties and the expiration of tax exemptions for EVs will also play a significant role in shaping the automotive landscape in the coming years.
With a "Neutral" stance on the sector overall, MIDF recommends cautious optimism, especially as key players like Bermaz Auto remain poised to navigate the anticipated market challenges, MIDF said. – March 24, 2025
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