Auto sales likely to ease
RHB Research maintained its 2025 vehicle sales forecast at 730,000 units.
PETALING JAYA: The automotive sector's total industry volume (TIV) rose by 12.4% month-on-month in May, reaching 68,007 units compared with 60,527 units in April.
In a statement, the Malaysian Automotive Association (MAA) said the higher TIV was due to more working days in May compared with April, ongoing strong promotional activities and the delivery of vehicles from bookings made in the first quarter of 2025.
However, on a year-on-year basis, MAA said the TIV fell by 3.2% from the 70,254 units recorded in May 2024.
MAA noted that a total of 65,970 vehicles were produced in May, down 11.6% from the same month last year.
'TIV for June is expected to be lower than May due to a one-week plant shutdown during Hari Raya Aidiladha by major makes,' MAA said in its outlook for June.
Meanwhile, RHB Research said auto sales momentum is expected to ease further in the coming quarters due to the lack of catalysts, softening order backlogs and a high base effect from 2024.
The research house maintained its 2025 vehicle sales forecast at 730,000 units, representing an 11% year-on-year (y-o-y) decline from the record high of 816,747 units last year.
'We do not see any compelling catalysts for 2025 auto sales to be maintained at elevated levels,' it said.
RHB Research noted that its forecast aligned with the year-to-date April TIV of 248,700 units – a 5% y-o-y drop – which made up 34% of its full-year assumption.
The research house remained cautious on the sector, citing 'ongoing price competition in the non-national segment and softening order backlogs.'
'We anticipate TIV to soften y-o-y in the second quarter of this year (2Q25), due to the declining order backlogs, shorter working quarter as a result of the long festive holidays, as well as scheduled factory maintenance shutdowns by major carmakers.'
While the expiry of tax exemptions for fully imported electric vehicles (EVs) after 2025 could lead to a short-term spike in EV sales, RHB Research said the impact on overall TIV would be minimal.
'The local EV market remains modest, accounting for about 2% of total car sales. Hence, it is unlikely that a surge in EV demand would materially move the TIV needle in 2025,' it said.
In line with its 'cautious' outlook, RHB Research has maintained its 'neutral' call on the sector.
'We maintain our sector weighting –premised on a lack of catalysts to drive sales and earnings to new highs.'
RHB Research said sector earnings for 1Q25 were largely underwhelming, with two out of four companies under its coverage – Sime Darby Bhd and Tan Chong Motor Holdings Bhd – coming in below expectations, while MBM Resources Bhd and Bermaz Auto Bhd were in line.
Despite the miss, Sime remained its sole 'buy' call within the sector, supported by robust mass-market brand contributions from Perusahaan Otomobil Kedua Sdn Bhd or Perodua and Toyota Motor Corp.
'Automotive sales volumes may slow, but solid contributions from mass-market brands – Perodua and Toyota – should cushion the impact (for Sime).'
On the policy front, RHB Research highlighted that the rationalisation of the RON95 fuel subsidy is set to proceed as reaffirmed by the prime minister.
'While details remained limited, earlier indications may point to a rollout in the second half of 2025.
'Nonetheless, we believe the policy will raise vehicle ownership costs. This could accelerate EV adoption or lead some consumers to downtrade, especially given the limited affordable EV options.
'Public transport may gain traction as an alternative, but much will depend on how the policy is executed,' it added.
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