PETALING JAYA: Malaysia’s automotive sector is expected to deliver a solid set of fourth-quarter 2025 (4Q25) results, underpinned by record sales volumes and firm demand for new car models, even as competition in the market continues to intensify.
According to CIMB Securities Research, most automakers have yet to announce their 4Q25 earnings, but the research house expects a strong earnings performance following a record quarterly total industry volume (TIV).
TIV rose 8.3% year-on-year (y-o-y) to an all-time quarterly high of 241,416 units in 4Q25, driven by new model launches and firmer electric vehicle (EV) demand.
National marques recorded 8.2% year-on-year growth, the research firm said, while most Japanese brands also posted higher sales on the back of aggressive promotional campaigns.
CIMB Research said the strengthening of the ringgit against the US dollar and Japanese yen is a positive tailwind for the sector, as most completely built-up imports and completely knocked-down kits are denominated in foreign currencies.
“We expect Sime Darby Bhd
, MBM Resources Bhd and Bermaz Auto Bhd to benefit from favourable foreign-exchange movements, although for Sime Darby, this may partly offset overseas earnings translation,”it said.
Despite these positives, CIMB Research maintained a “neutral” call on the sector, citing a subdued growth outlook amid intensifying competition.
The sector is currently trading at 10.9 times 2026 price-to-earnings, slightly below its five-year average of 11.3 times.
“While this valuation discount reflects muted earnings growth prospects in a highly competitive environment, the sector continues to offer attractive dividend yields of 6.6% and 6.8% for 2026 and 2027, respectively,” the research outfit said.
CIMB Research has maintained its 2026 TIV forecast of 800,000 units.
It is slightly above the Malaysian Automotive Association’s projection of 790,000 units, premised on clearer policy direction following the implementation of the Budi95 petrol subsidy programme and confirmation that revisions to open market values will not lead to immediate price hikes.
Meanwhile, Hong Leong Investment Bank (HLIB) Research said TIV started 2026 at a “respectable” 64,300 units in January, although this represented a 29.1% month-on-month decline from December’s record deliveries.
HLIB Research attributed the sequential drop mainly to inventory normalisation following accelerated production and deliveries at end-2025, noting that demand fundamentals remain intact, particularly for national marques.
“Despite the sequential drop, TIV rose 26.9% y-o-y, underpinned by improved supply chain conditions,” it highlighted.
Looking ahead, HLIB Research expects competition to intensify further, especially among non-national brands facing pressure from new entrants offering more competitive pricing and refreshed models.
The research firm has maintained a “neutral” stance on the automotive sector, projecting 2026 TIV to normalise to 780,000 units, representing a 5.0% y-o-y decline.
It expects national marques to sustain their sales momentum in 2026, supported by strong order backlogs and continued demand for affordable models.
In contrast, it said non-national marques may remain under pressure amid intensifying competition from new entrants offering more competitive pricing, refreshed designs and enhanced product features.
HLIB Research added that sector earnings are likely to remain pressured in 2026.
“We project sector earnings to remain pressured in 2026 from lower sales volumes and rising operating costs due to intensified promotional efforts,” the research firm said.
However, it said the impact would be largely cushioned by a stronger ringgit against the US dollar and Japanese yen.
