Malaysia: Malaysia's automotive sales are projected to stay robust in the latter half of 2026, bolstered by the introduction of more localised electric vehicle (EV) models and a heightened demand for hybrid vehicles. This trend is driven by consumers' increasing preference for new energy vehicles.

According to BERNAMA News Agency, Kenanga Investment Bank Bhd (Kenanga IB) has adjusted its 2026 total industry volume (TIV) forecast upwards to 800,000 units from the previously projected 790,000 units. This revision aligns with the latest projections from the Malaysian Automotive Association and follows a stronger-than-expected performance in EV sales despite the implementation of stricter EV policies.

In the first half of 2026, EV sales surged to 26,192 units as global automakers moved to clear their existing completely built-up (CBU) inventories while transitioning to localised completely knocked down (CKD) assembly. Hybrid vehicle sales also remained strong, recording 25,590 units, and are anticipated to further strengthen in the latter half of 2026 with the launch of the Proton eMas 7 PHEV.

Conversely, commercial vehicle sales saw a decline of 11% in the first half of 2026, attributed mainly to decreased pick-up truck sales following a spike in diesel prices before the introduction of the Budi Diesel subsidy programme.

Kenanga IB's projections for the 2026 TIV consider a trend of discounts and rebates as a strategy to capture market share, along with the gradual implementation of a new open-market-value (OMV) excise duty regulation, postponed to January 2027 and possibly beyond. Additionally, a pre-tax cost, insurance, and freight (CIF) floor price of RM200,000 for imported EVs was introduced in July 2026.

The report highlighted that the increasing localisation of Chinese vehicle brands, sustained demand for affordable vehicles, new hire-purchase loan policies, a stable labor market, and a pipeline of new model launches will further contribute to the 2026 TIV. The industry's earnings visibility remains positive, supported by a booking backlog of 152,000 units as of end-June 2026, which surpasses the average booking of 140,000 units in 2025.

CGS International (CGSI) also anticipates a stronger sales momentum in Malaysia's automotive sector for the second half of 2026, driven by seasonal demand and ongoing promotional activities. The firm has raised its 2026 TIV forecast to 780,000 units from 755,000 units, expecting promotional activities to bolster the second-half sales momentum.

CGSI noted that the revision was prompted by stronger-than-expected sales in the first half, with total industry volume reaching 385,353 units, which is 51% of its full-year forecast, spurred by new model launches and promotional campaigns.

The Malaysian Automotive Association reported a 23% year-on-year increase in June 2026 TIV, amounting to 67,879 units, aided by demand from the Kuala Lumpur International Mobility Show (KLIMS) and broad-based discounting, despite fewer working days. The first half of 2026 saw a 3% increase in TIV, totaling 385,353 units.

In terms of sector outlook, Kenanga IB retained its 'neutral' stance, while CGSI maintained an 'overweight' rating, supported by stock-specific earnings catalysts despite a softer industry outlook.