CIMB Securities said the new petrol subsidy mechanism provides near-term demand stability.
PETALING JAYA: Domestic automotive stocks continue to face headwinds amid intensifying competition from Chinese marques as the new RON95 petrol subsidy mechanism accelerates a structural transition in product mix towards efficiency and electrification.
CIMB Securities, which maintained a “neutral” call on automotive stocks, said the new petrol subsidy mechanism provides near-term demand stability underpinning sales momentum in the national car segment as well as entry-level Japanese marques, with potential upside to its 2025 total industry volume (TIV) forecast.
Sime Darby Bhd
remains its top pick underpinned by earnings recovery in its Australian mining operations, broad electric vehicle (EV) portfolio, strategic stake in Malaysia’s auto market leader Perusahaan Otomobil Kedua Sdn Bhd (Perodua), and potential value unlocking from non-core and land bank assets.
It has a target price of RM2.24 for the stock.
The brokerage had initially factored in a potential drag on new vehicle sales from the removal of petrol subsidies, but noted that “the government’s move to reduce the price of subsidised RON95 petrol to RM1.99/litre is designed to maintain fuel affordability for Malaysians” and support demand for mass-market internal combustion engine vehicles.
“With the subsidy capped at 300 litres per month per citizen – a level that over 99% of drivers do not exceed – car usage remains largely unaffected, particularly for small and mid-sized fuel-efficient models,” it said, adding that while monthly TIV reached the highest in August, rising 4.3% month-on-month year-to-date (y-t-d), on a year-on-year basis, TIV fell 3.8%.
It pointed out that the new petrol cap would change the behaviour of certain groups such as long-distance commuters, logistics players and premium car owners as they faced higher effective fuel costs.
“Over time, this may drive a shift towards more fuel-efficient cars, hybrids, and EVs.
“This trend would favour brands already expanding their cleaner mobility offerings; Proton has launched its e.MAS 7 EV and is set to roll out a second EV model by end-2025, while Perodua is preparing to debut its first EV within the same timeframe.
“Meanwhile, Sime continues to strengthen its leadership in the premium and luxury EV segment,” it said.
Data from the Malaysian Automotive Association, which released August TIV on Tuesday, showed that y-t-d, vehicle sales reached 516,818 units, with August sales at 73,041 units boosted by Merdeka deals.
The y-t-d sales were dragged lower by weaker demand for passenger and commercial vehicles.
In the non-national segment, Chinese marques continued their rapid ascent by expanding market share to 5.9% y-t-d compared to 3% in the previous period on new models.
Although Toyota retained its leading position with an 11.8% market share, Chery Automobile Co Ltd’s Jaecoo emerged as the fifth-largest brand by sales volume with a 2.1% market share surpassing Mitsubishi’s 1.9%.
