| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The Malaysian automotive sector is facing a challenging period, marked by a recent sector downgrade to “Underweight” by TA Securities. While August 2025 saw a month-on-month improvement in total industry volume (TIV), the cumulative year-to-date figures remain subdued, and the outlook for the coming months suggests continued pressure on sales and profitability.
Performance Review
According to the Malaysian Automotive Association (MAA), the total industry volume (TIV) for August 2025 registered 73,000 units, a 4.2% increase from July 2025. This stronger monthly performance was primarily driven by improved stock availability, aggressive promotional campaigns during the Merdeka celebration month, and the positive impact of new model launches. Passenger vehicle sales increased 4.4% month-on-month, with commercial vehicle sales up 1.3%. However, on a year-on-year (YoY) basis, August TIV was broadly flat at +0.6%. For the first eight months of 2025 (8M2025), cumulative TIV decreased by 3.8% YoY to 516,900 units, weighed down by softer performance in both passenger (-2.7% YoY) and commercial (-1.6% YoY) segments.
Proton notably saw a 10.9% month-on-month sales surge in August, supported by strong demand for its X50 and Saga models, nationwide promotions, and growing EV sales. Despite this, the overall year-to-date TIV for national passenger vehicles remains down 2.0% YoY. Non-national passenger vehicles also experienced a 16.2% month-on-month rise in August, led by strong performances from brands like Honda, Mazda, and VW.
Future Outlook and Challenges
Looking ahead, MAA anticipates a slowdown in sales momentum for September 2025. This expected dip is attributed to fewer working days due to four public holidays and a “wait-and-see” approach from consumers in anticipation of the 2026 National Budget announcement, particularly concerning details on petrol subsidy rationalisation. Furthermore, planned plant shutdowns by major industry players are expected to exert additional pressure on September’s TIV.
The sector is grappling with intense price competition, which is projected to squeeze profit margins as brands aggressively pursue market share gains. TA Securities maintains its 2025 total industry volume (TIV) forecast at 750,000 units, representing an 8.2% YoY decline, reflecting a cautious and challenging outlook for the automotive sector.
Investment Bank’s View
Reflecting the heightened downside risks and challenging market conditions, TA Securities has downgraded its sector rating to Underweight from Neutral. The bank highlights a lack of near-term catalysts to reverse the current overpriced valuation within the sector. Consequently, specific stock recommendations include maintaining SELL ratings on BAuto (Target Price: RM0.51) and MBMR (Target Price: RM4.31), and downgrading SIME to SELL (Target Price: RM1.97) from Hold.
