PETALING JAYA: The automotive sector may be on track for a stronger second half of financial year 2026 (2H26) after total industry volume (TIV) exceeded expectations in the first six months of the year.
This has prompted CGS International (CGSI) Research to raise its full-year sales forecast while maintaining an “overweight” call on the sector.
It increased its 2026 TIV forecast to 780,000 units, up from 755,000 units.
But this rise in the forecast would nevertheless still represent a 5% year-on-year decline.
It said stronger-than-expected first-half sales, continued promotional activities and new model launches are expected to sustain momentum through the remainder of the year.
According to the Malaysian Automotive Association, June TIV rose 23% year-on-year and 10% month-on-month (m-o-m) to 67,879 units, supported by demand generated during the Kuala Lumpur International Mobility Show and broad-based discounting across the industry.
Year-to-date TIV reached 385,353 units, up 3% from the corresponding period last year.
“The m-o-m growth was mainly driven by Honda (plus 77% mom) on heavy discounting, while Perodua (plus 12% mom) was supported by stronger Bezza and Alza sales,” it said.
During 1H26, Proton, Mazda, BYD and Jetour outperformed the broader market, benefiting from new model launches, growing electric vehicle (EV) demand and market share expansion.
The research house also highlighted the continued rapid growth of the EV segment.
Based on Road Transport Department data, EV registrations climbed 90% year-on-year and 23% m-o-m to 6,215 units in June, as buyers accelerated purchases ahead of tighter completely built-up EV policies that took effect in July.
First-half EV sales rose 106% to 26,192 units, accounting for 6.8% of total industry volume, although the figures exclude several brands such as Tesla, XPeng and Zeekr.
Despite expecting overall industry sales to remain softer than last year, CGSI Research believes several listed automotive companies continue to offer attractive earnings growth driven by company-specific catalysts.
The research house reiterated its preference for Bermaz Auto Bhd
, Hong Leong Industries Bhd and Sime Darby Bhd, with Sime Darby remaining its top sector pick.
It said Sime Darby’s industrial division is poised for long-term growth, supported by resilient demand for mining equipment and structural demand for copper and metallurgical coal, as well as a recovery in after-sales rebuild activities expected in the 2H27 and stronger equipment sales in financial year 2028.
CGSI Research added that post-war reconstruction of industrial capacity within and outside the Middle East is expected to underpin commodity demand and mining activity.
It said Sime Darby is also well positioned to benefit from sustained demand for EVs and affordable mass-market vehicles in Malaysia.
Trading at about 8.7 times its projected calendar year 2027 earnings with an expected dividend yield of 6.8%, the research house said the stock continues to offer an attractive risk-reward proposition.
Meanwhile, BIMB Research raised its full-year 2026 TIV forecast to 770,000 units from 740,000.
“We maintain our neutral stance, preferring resilient national names over squeezed mid-tier foreign brands,” it said.
