PETALING JAYA: BYD Malaysia Sdn Bhd’s move to assemble electric vehicles (EVs) locally through Inokom Corp Sdn Bhd could pave the way for more competitively priced models in Malaysia.
The Chinese carmaker’s decision to use Inokom’s existing facilities instead of building its own plant is also expected to benefit Sime Darby Bhd
and Bermaz Auto Bhd (BAuto), although the earnings contribution could be modest.
In a report, TA Research said partnering Inokom is a “more practical approach” for BYD, as it would allow the company to leverage Inokom’s existing manufacturing facilities, experienced workforce and established supply chain, reducing upfront investment costs and potentially speeding up the start of local production.
“We believe local assembly could help BYD become more competitive in terms of pricing and vehicle availability, potentially supporting higher sales volumes,” it said.
However, the research house cautioned that lower production costs might not necessarily translate into better margins if the savings were passed on to consumers through lower selling prices.
BYD Malaysia appointed Inokom as its local completely knocked-down (CKD) assembly partner following the signing of a memorandum of understanding in Shenzhen, China, on Oct 15.
The agreement follows BYD’s decision to abandon its earlier proposal to build a manufacturing plant in Tanjong Malim, Perak.
Under the original proposal, domestic sales were limited to 20% of planned production, or 10,000 vehicles, with the remaining 80% intended for export.
Locally sold vehicles were also subject to a minimum on-the-road price of RM100,000.
TA Research said BYD Malaysia might no longer face the same domestic sales restrictions under its partnership with Inokom, although the terms of the new approval have yet to be confirmed.
“We believe this could be a key advantage, allowing BYD to focus more on the Malaysian market without committing substantial investment to a new factory,” it noted.
The research house added that BYD’s decision could encourage other foreign carmakers to to partner existing local assemblers rather than establish their own manufacturing facilities.
The development comes as the local EV market continues to expand, with registrations nearly doubling to 53,500 units in the first nine months of 2026 (9M26) from 26,900 units a year earlier, according to TA Research, citing Road Transport Department data.
EVs accounted for 8.4% of total new vehicle registrations in 9M26, up from 4.4% a year earlier.
Proton e.MAS led the market with 24,900 registrations, followed by BYD with 8,100 units.
Despite stronger adoption, TA Research said competition is also getting tougher, particularly with the entry of more Chinese brands and aggressive pricing strategies.
“At the same time, increasing competition could put further pressure on other automotive players, particularly those relying on imported vehicles,” it added.
TA Research said Inokom’s 200-acre assembly plant in Kulim, Kedah, is expected to begin assembling BYD vehicles within the next few months.
The plant is currently operating at around 80% utilisation, based on the research house’s checks with Sime Darby’s management.
Kia’s planned relocation of its CKD operations to Stellantis’ Gurun plant could also free up capacity, TA Research said. However, it remains unclear whether the current utilisation rate accounts for Kia’s exit or whether BYD’s production would mainly replace the lost volumes.
Inokom employs more than 2,700 workers and assembles vehicles for BMW, MINI, Porsche, Mazda, Hyundai and Chery.
Its production volume rose from 20,500 units in 2021 to more than 31,800 units in 2025. TA Research also noted that Inokom’s new RM300mil paint shop, which began operations in August, has doubled its annual painting capacity to 100,000 vehicles.
However, the research house said uncertainty remains over actual production volumes and assembly margins, making it difficult to determine the potential earnings contribution.
TA Research expects the partnership to make only a modest contribution to Sime Darby and BAuto, with the actual impact depending on production volumes and assembly margins.
Based on its sensitivity analysis, assembling 10,000 BYD vehicles annually at an incremental net profit of RM500 per vehicle could generate RM5mil in additional net profit for Inokom.
Of this, about RM2.7mil would be attributable to Sime Darby and RM1.5mil in associate earnings to BAuto, representing less than 1% of both companies’ forecast core earnings for the financial year 2027, it said.
Still, TA Research said Sime Darby could benefit from assembly income through Inokom and vehicle distribution through Sime Motors, while BAuto could gain from its 29% stake in Inokom.
The brokerage said BYD would bear model-specific capital expenditure, with Inokom funding only limited shared tooling costs.
However, the recovery in Mazda’s sales and margins remains the key earnings driver for BAuto, the sole official distributor of Mazda vehicles, parts and after-sales services in Malaysia.
Overall, TA Research maintained its “neutral” stance on the automotive sector, citing the risk that intensifying competition, particularly in the EV segment, could continue to pressure industry margins.
