PETALING JAYA: Malaysia’s automotive sector is expected to maintain its resilience through the rest of 2026, supported by sustained demand for affordable models, strong order backlogs and a pipeline of new launches, although intensifying price competition is likely to pressure margins.
Both Hong Leong Investment Bank (HLIB) Research and Kenanga Research expect total industry volume (TIV) to reach about 800,000 units this year, with national marques Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Proton Holdings Bhd (Proton) continuing to gain ground.
HLIB Research maintained its “overweight” call on the sector and raised its 2026 TIV forecast to 800,000 units from 780,000, citing the stronger-than-expected performance of national carmakers.
“We expect national original equipment manufacturers (OEMs) to sustain their sales momentum in the second half of the year (2H26), while non-national OEMs may remain under pressure amid intensifying competition in pricing, refreshed models and enhanced product offerings,” it said in a report published yesterday.
Kenanga Research, however, retained a “neutral” sector stance, arguing that the higher sales volume is likely to come with greater promotional spending and margin pressure.
“Our 2026 TIV forecast of 800,000 units (minus 3% year-on-year) matches the forecast by Malaysian Automotive Association (MAA), driven by discounts/rebates trend, coming likely at the expense of margin, delayed in new open market value regulation, a flood of localised Chinese vehicles, and new launches leaning towards value-for-money offerings,” it said.
The differing sector calls reflect a market in which volumes remain healthy but competition is becoming increasingly intense.
Malaysia recorded 73,615 vehicle sales in July, up 8% month-on-month (m-o-m) and 3% year-on-year (y-o-y), bringing cumulative sales for the first seven months to 459,049 units, up 3% from a year earlier.
Commercial vehicle sales jumped 21% m-o-m, partly following the introduction of Budi Diesel, while passenger vehicle sales rose 8% m-o-m and 5% y-o-y.
Perodua remained the market leader, selling 31,842 vehicles in July, up 16% m-o-m although 5% lower y-o-y.
Proton was the standout performer, with sales rising 10% m-o-m and 29% y-o-y to 17,016 units. Its cumulative sales reached 115,025 units, up 39% y-o-y.
The two national marques together accounted for about 66% of the market in the first seven months, up from 63% a year earlier.
Kenanga Research attributed their strength to sustained demand for affordable vehicles and attractive new models.
Proton’s performance has been supported by its Saga and e.Mas models. HLIB Research said the newly launched Saga MC3 had been a key driver, while Proton’s electric vehicles (EVs) sales reached 16,500 units in the first seven months.
Perodua could receive another boost from its decision to cut the price of the Axia by up to RM4,700 from Aug 3.
HLIB Research expects the price reduction to support sales, while Kenanga Research noted that Perodua had a substantial 70,000-unit order backlog.
Proton’s backlog was even higher at 80,000 units, while Toyota had 14,000 outstanding orders.
Overall industry order visibility remains relatively strong. Kenanga Research said the sector had a 170,000-unit booking backlog at end-July, above the 140,000-unit average in 2025, with more than half comprising new models.
“In general, the industry’s earnings visibility is still good, backed by a booking backlog of 170,000 units as at end-July 2026,” it pointed out.
The non-national segment is facing a tougher environment. Toyota remained the leading foreign marque, but its first-seven-month sales fell 14% year-on-year, while Honda’s declined 20%.
