PETALING JAYA: Lower total industry volume (TIV) in the first quarter of 2026 (1Q26) weighed on the automotive sector’s earnings, although the impact was partly cushioned by the stronger ringgit, analysts say.
Among the major players, Sime Darby Bhd
saw its motor segment’s core profit before interest and tax fall 32% quarter-on-quarter to RM143mil in the three months ended March 31, 2026.
Analysts said the sequential weakness was largely expected, in line with seasonally weaker car sales.
In 1Q26, the automotive sector’s TIV fell 3% year-on-year (y-o-y) to 182,113 units, from 188,143 units recorded in the corresponding period last year.
However, sector TIV rebounded 13.6% month-on-month (m-o-m) in April 2026 to 72,113 units, driven by stronger passenger vehicle and commercial vehicle sales.
According to CIMB Research, the rebound in April industry sales was supported by a recovery in production volumes at national carmakers and continued demand for new vehicle launches.
Total production volume surged 46.7% m-o-m to 70,611 units, mainly driven by a 56.3% increase in Perodua’s output and a 48.5% jump in Proton’s production.
CIMB Research said the strong recovery in April helped reverse the decline recorded in 1Q26, lifting cumulative TIV for the first four months of 2026 (4M26) back into positive territory with a 1.8% y-o-y increase to 254,226 units.
The growth was largely supported by Proton, whose sales surged 42.3% y-o-y during the period, driven by stronger demand for its new Saga and xEV models.
Excluding Proton, however, 4M26 TIV would have declined 7.7% y-o-y, according to CIMB Research.
Perodua performed relatively better than the wider market with sales declining 5.5% y-o-y, mainly due to lower model availability following production disruptions during the Chinese New Year and Hari Raya festive periods.
Overall, national marques expanded their market share by 4.3 percentage points y-o-y to 67.9% in 4M26.
Within the non-national segment, CIMB Research said Japanese original equipment manufacturers (OEMs) lost market share, with Toyota’s and Honda’s shares declining by 2.5 percentage points and three percentage points, respectively, to 8.6% and 6.5%.
“Conversely, Chinese OEMs continued to gain traction, recording 27.3% y-o-y sales volume growth,” it said.
Despite the stronger April performance, CIMB Research maintained its 2026 TIV forecast of 780,000 units, representing a 5% decline from 820,752 units last year, citing a challenging macroeconomic outlook and inflationary pressures from higher energy prices amid the ongoing Middle East conflict.
Nevertheless, the research house expects national brands to further strengthen their position, with market share projected to rise to 66% in 2026 from 62.4% in 2025, supported by growing adoption of xEVs and competitively priced product offerings.
On a separate note, CIMB Research said the government’s tighter completely built-up electric vehicle (EV) import policy could accelerate localisation efforts and moderate price competition in the domestic EV market.
The research house maintained a “neutral” call on the sector, citing subdued growth prospects amid intensifying competition.
The sector is currently trading at 10.1 times 2026 forward price-to-earnings ratio, slightly below its five-year average of 11 times, while offering dividend yields of 6.6% to 6.9% for 2026 to 2027.
