RHB: Inflation to weigh on Malaysia auto sales in 2H25
The firm said the decline will also be driven by incumbent non-national marques, which continue to face intensifying competition as a result of new entrants, primarily Chinese carmakers.
"The influx of new models coupled with aggressive price discounting has created a highly competitive environment.
"Some buyers may delay their purchases in anticipation of further price cuts from both existing and new non-national marques, thereby destabilising the non-national segment," it added.
RHB Research kept its total industry volume (TIV) forecast at 730,000 units, representing an 11 per cent decline on a yearly basis.
The firm noted that after three consecutive record-breaking years, the market is showing signs of normalisation amid weakening order backlogs, tighter loan approvals and intensifying price competition, particularly in the non-national segment.
As of June 2025, TIV stood at 373,636 units, accounting for 51 per cent of RHB Research's full-year projection.
Carmakers such as Perodua and Toyota have seen a decline in order backlogs to 90,000 and 15,000 units, respectively, compared to 100,000 and 20,000 units a year ago.
Loan approval rates for vehicle purchases have also dipped to 55 per cent year-to-date, down from 58–63 per cent in the 2022–2024 period, pointing to tighter credit conditions.
These factors, combined with looming inflationary pressure, suggest further moderation in consumer demand.
In the electric vehicle (EV) space, RHB Research expects growth to persist but remain modest due to high prices and limited charging infrastructure.
The firm said the current tax exemptions for completely built-up (CBU) EVs, which have supported early adoption, are unlikely to be extended beyond end-2025, as the government shifts its focus to incentivising locally assembled EVs.
"An extension of the tax holiday for CBU EVs would be counterproductive for incentivising original equipment manufacturers to establish local production facilities.
"While we expect EV numbers to continue picking up in the coming months, growth in market share is likely to remain moderate due to structural headwinds, such as high pricing and limited availability of charging infrastructure.
"As such, EVs are unlikely to influence overall TIV in the near term," RHB Research said.
The firm added that another overhang is the impending implementation of the revised open market value (OMV) excise duty in January 2026.
The firm said that though recently deferred again, it could lead to a 10–30 per cent price hike for CKD vehicles unless mitigated by the authorities.
The Finance Ministry has signalled that such a steep hike is unlikely but has yet to finalise the new pricing methodology.
"The new OMV takes into account the engineering work, royalty payments and license fees, amongst others.
"For CBU vehicles, prices are based on the cost, insurance and freight, on which import and excise duties are imposed," it added.
RHB Research maintained its "neutral" stance on the auto and autoparts sector.
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