Malaysia's auto sales to normalise in 2025 after record year
Hong Leong Investment Bank (HLIB) said the moderation is largely driven by a reduction in order backlogs and a slowdown in new order intake expected in the coming months.
Its forecast is lower than Malaysia Automotive Association's forecast, which estimates the TIV at 780,000 units.
TIV reached 68,000 units in May 2025, marking a 12.4 per cent increase month-on-month but a 3.2 per cent decline year-on-year, rebounding from a weaker April performance impacted by the Raya holidays.
Despite aggressive sales efforts by various original equipment manufacturers (OEMs), year-to-date TIV still declined by 5.0 per cent to 316,700 units, reflecting a market normalisation trend driven by a reduction in order backlogs.
"Nevertheless, there is still upside potential from exciting new model launches in 2025, with more aggressive marketing activities to sustain sales by the various OEMs, but at the expense of margins," it said.
HLIB said current order backlogs have further dwindled in the second quarter of 2025 (2Q25), and this downward trend is expected to persist in the following quarters.
The weakening is attributed to softer consumer sentiment, influenced by a slower economic outlook and the upcoming implementation of petrol subsidy rationalisation in the second half of 2025 (2H25).
"We expect earnings for the sector to drop in 2025 due to lower sales volume and higher operating costs (aggressive sales campaigns), but partially cushioned by ringgit strengthening," it added.
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