SIME: Malaysian Automotive Sector Achieves Record 2025 Sales, Faces Cautious Outlook
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The Malaysian automotive sector concluded 2025 with a robust performance, registering a record-high total industry volume (TIV) that surpassed both the Malaysian Automotive Association’s (MAA) forecast and TA Securities’ own estimates. Despite this strong finish, the sector faces a cautious outlook for 2026, marked by intensifying competition and projected sales contractions.
Performance Review
December 2025 saw a significant surge in TIV, climbing 23.4% month-on-month (MoM) to an unprecedented 90,700 units. This strong monthly showing pushed the full-year 2025 TIV to 820,800 units, exceeding MAA’s forecast of 780,000 units and TA Securities’ estimate of 800,000 units. The record performance was largely underpinned by aggressive year-end promotions and a concerted effort to clear delivery backlogs.
On a year-on-year (YoY) basis, December TIV expanded 10.3%, primarily driven by a robust 13.2% YoY increase in passenger vehicle demand. While full-year passenger vehicle volumes remained broadly stable with a 1.4% YoY increase, commercial vehicle sales experienced a significant decline of 11.7% YoY, reflecting a still-cautious business sentiment amidst higher operating costs and the impact of subsidy removal.
Shifting Market Dynamics & Key Drivers
The 2025 growth was notably propelled by non-national brands, particularly new entrants and smaller marques, which intensified competition within the market. Non-national passenger vehicle sales rebounded sharply in December, surging 50.3% MoM, with Honda and Toyota leading the recovery. Cumulatively, non-national sales increased 1.8% YoY for the full year.
A significant trend observed was the escalating adoption of electric vehicles (EVs) and hybrid vehicles (HVs), collectively categorized as xEVs. In 2025, xEV sales soared by 52.2% YoY to 69,400 units. Pure EVs more than doubled, recording a 108.9% YoY increase to 30,800 units. xEVs now constitute approximately 8.0% of total TIV, up from 5.6% in 2024, reflecting accelerating adoption driven by policy incentives.
Outlook and Challenges
Looking ahead, MAA projects a slight contraction in total TIV for 2026, forecasting 790,000 units, a 3.7% YoY decrease. The passenger vehicle segment is expected to see a modest 3.8% YoY contraction to 730,000 units, with commercial vehicle sales easing 2.7% YoY to 60,000 units. The sector faces headwinds from intensifying price competition, which is expected to compress margins, and the new competitive dynamics introduced by the rising adoption of xEVs.
Despite the overall cautious outlook, MAA anticipates continued momentum in xEV demand, projecting sales to reach 100,000 units in 2026, with HVs contributing 51,000 units and Battery Electric Vehicles (BEVs) 49,000 units.
Investment Bank’s View
TA Securities maintains an “Underweight” rating on the automotive sector, citing expectations of intensifying price competition weighing on margins and a cautious sector outlook for 2026. The firm has reiterated its “SELL” recommendations for key players including BAuto (Target Price: RM0.57), MBMR (Target Price: RM4.60), and SIME (Target Price: RM1.97), emphasizing that market share gains are likely to come at the expense of profitability.
