PETALING JAYA: The automotive sector is expected to rebound this month, with sales projected to improve on the back of festive demand tied to Hari Raya Aidilfitri, following a softer performance in February due largely to seasonal factors.
According to the Malaysian Automotive Association (MAA), February’s slowdown was not indicative of underlying demand weakness but rather a function of timing and operational disruptions.
“Sales are expected to pick up in March 2026 in conjunction with Hari Raya Aidilfitri,” the association said in its latest monthly update.
The industry recorded a sharp month-on-month contraction in February, with total industry volume (TIV) falling 19% from January.
The MAA attributed the decline primarily to the shorter working month, which had only 17 working days, as well as the Chinese New Year (CNY) holidays and a one-week plant shutdown during the festive period.
Production mirrored the softer conditions, as total vehicle output dropped 20% year-on-year (y-o-y) in February to 49,741 units, compared with 62,090 units a year earlier.
Passenger vehicle production bore the brunt of the decline, falling 21% to 46,808 units, while commercial vehicle production remained broadly flat at 2,933 units.
Sales performance followed a similar trend, with total vehicle sales declining 19% y-o-y to 52,414 units in February, down from 65,052 units previously.
Passenger vehicle sales slipped 21% to 48,748 units, while commercial vehicle sales edged down 2% to 3,666 units.
Despite the weak monthly showing, year-to-date (y-t-d) figures suggest a more resilient industry outlook. In the first two months of 2026, total production declined 7% y-o-y to 110,607 units, compared with 119,540 units in the same period last year.
However, total sales edged up 1% to 116,712 units from 115,501 units, supported by steady demand for both passenger and commercial vehicles.
Passenger vehicle sales in the y-t-d period rose marginally by 1% to 109,117 units, while commercial vehicle sales increased 6% to 7,595 units.
On the production side, passenger vehicle output fell 8% y-o-y, whereas commercial vehicle production grew 6%, reflecting stronger momentum in the commercial segment.
The divergence between production and sales points to a drawdown in inventory levels, suggesting that earlier stock accumulation may have cushioned supply disruptions during the festive period.
An industry analyst told StarBiz that given the February weakness was almost entirely seasonal, the base effect for the first quarter (1Q26) should be favourable.
He said the 1% y-t-d sales improvement compared to last year means March does not need to be dramatically stronger than 2025, as even a modest festive rebound would likely push cumulative 1Q26 sales into positive territory versus a year ago.
“That said, the one-week plant shutdown and short February month do create short-term supply-chain volatility that could temporarily squeeze margins.
“For valuations, we believe Malaysian auto stocks would likely see a relief rally on the March pickup, but any valuation expansion should be modest until we see whether the rebound is broad-based or just a one-month festive spike,” he pointed out.
The analyst is holding a “neutral-to-positive” view on the automotive sector, recommending a buy-on-weakness stance on Malaysian auto-related stocks that have strong domestic exposure and balanced production capacity.
“Looking ahead, the anticipated March recovery will be closely watched as much will depend on whether this rebound is sustained into the second quarter, especially amid evolving macroeconomic conditions and consumer sentiment,” he said.
