PETALING JAYA: The local automotive sector may see a gradual move to battery electric vehicles (BEVs) in five years or more due to the general preference among motorists for internal combustion engine (ICE) for now.
Petrol subsidies, vehicle resale values and mass market appeal with slower than anticipated BEV charging infrastructures are other key considerations that could hinder quicker uptake of such vehicles.
But BEVs, which enjoy tax exemption up to 2027 for locally-assembled completely knocked down units, may still find their audience among the populace, according to Kenanga Research.
The research hosue said BEV adoption would eventually pick up and demand for ICE vehicles could potentially peak in the longer term.
“This new petrol subsidy mechanism, in our view, could make the transition even slower than earlier expected as the middle to lower income groups have less incentive to switch from ICE to BEV.
“New registrations of BEVs leapt from 274 units in 2021 to 44,800 units in 2025, or 5.5% of the total industry volumes at last count,” it said.
Malaysia aimed for electric vehicles (EVs) to represent 20% of new vehicle sales by 2030, with a long-term vision to have them constitute 80% of the total industry volume by 2050, which includes hybrid vehicles.
The government appeared focused on building up the ecosystem, which includes plans for more public charging points with the current number of proposed charging stations at 4,477 and providing tax incentives to stimulate adoption and local production, it said.
An automotive analyst said it is likely that the government would extend the timeline for greater BEV adoption, given it has not met most of its initial targets – for example the number of charging stations.
“Also the Middle East is another factor that may play into this overall situation and encourage further EV adoption especially if subsidised petrol prices have to be raised temporarily,” the analyst said.
Meanwhile, Kenanga Research said the new trend of apparently strong discounting or rebates during sales could affect margins, although this might give a particular brand a better market share exposure in the long run.
“On the contrary, we believe that automakers have started to work around the discounting competition by focusing on other more profitable space.
“For example, Sime Darby Bhd
is focusing on its better-margin industrials at 7% compared with 1% for its auto segment.
“Bermaz Auto Bhd seems to be focused on the completely built up market which are unaffected by the open market value (OMV) policy.
“On the other hand, Hong Leong Industries Bhd is focusing on higher-margin premium motorcycles segment which has solid demand,” it said.
The new OMV excise duty regulation will be implemented gradually starting July 2026 which may result in limited or no vehicle price hikes eventually.
Kenanga Research rated the sector a “neutral”, with individual top picks: Bermaz Auto Bhd with an “outperform” call and a target price (TP) of RM1.10 and Hong Leong Industries Bhd with an “outperform” call and a TP of RM18.90.
