Malaysia’s Automotive Sector Expected To Slow Down In 2026, Says CGSI
PETALING JAYA: Malaysia’s automotive sector is expected to record slower growth this year despite temporary increases in vehicle sales during certain months, according to research firm CGS International (CGSI).
In a research note, CGS International said vehicle sales for May and June 2026 are projected to weaken due to fewer working days and softer seasonal demand following the festive period.
The firm noted that Total Industry Volume (TIV) for April 2026 rose by 17 per cent year-on-year, but the performance was largely driven by temporary factors such as post-festive vehicle deliveries.
“The increase does not necessarily reflect the longer-term trend, as the high comparison base from last year and a more challenging economic environment are expected to pressure demand in the second half of 2026,” it said.
CGS International added that while demand for electric vehicles (EVs) continues to grow strongly, the segment is still not large enough to offset the broader slowdown in the conventional vehicle market.
The research firm also expects ongoing cost-of-living pressures and uncertainty surrounding fuel prices to weigh on consumer sentiment, reducing the appetite for new vehicle purchases in the near term.
Meanwhile, CGSI maintained its 2026 TIV forecast at 755,000 units, representing an estimated decline of around eight per cent compared to the previous year.
According to the firm, the outlook reflects a more cautious market environment after the automotive industry experienced strong growth over the past few years.
“The automotive sector is not entirely weak, but is currently undergoing a stabilisation phase following a period of strong expansion,” it said.
From a market structure perspective, CGS International sees EVs as the main growth driver for the future automotive industry.
EV sales reportedly surged more than 200 per cent year-on-year, supported by the entry of Chinese brands such as BYD and Chery, as well as new model launches by Proton.
However, the firm stressed that the EV transition remains at an early stage and is not yet large enough to significantly reshape the overall automotive market in the short term.
In related developments, government policies such as the possible implementation of the BUDI95 fuel subsidy rationalisation programme and new regulations involving EV imports are expected to create mixed impacts across the market.
According to CGSI, these measures may benefit local EV players while creating pressure for certain imported models.
The firm also advised investors to remain cautious despite opportunities in the EV and affordable vehicle segments.
“Short-term challenges remain, especially in terms of overall market demand,” it said.
Among the companies highlighted was Sime Darby, which is seen as a key beneficiary of the EV transition and affordable vehicle segment through its stake in Perodua.
Meanwhile, Bermaz Auto remains under observation but was only given a “hold” recommendation as competition from Chinese EV brands continues to intensify despite recovering Mazda sales.
-wilayah.com.my
