T15 fuel subsidy criteria may lead to vehicle downgrade or EV shift, says MIDF Research

KUALA LUMPUR: The top 15 per cent (T15) income bracket fuel subsidy eligibility criteria, to be finalised by mid-2025, may push some consumers to downgrade their vehicle choices or switch to electric vehicles (EVs), according to MIDF Research.

In a note today, it said the upcoming policy change may spur buyers to opt for lower-cost internal combustion engine (ICE) models or transition to EVs before tax exemptions for fully imported (CBU) EVs expire at the end of the year.

"Meanwhile, the auto sector's revised excise duty has been extended, which will expand duties on completely knocked down (CKD) components.

"The tax, set to be effective January 2026, is expected to drive CKD car prices up by 10 to 30 per cent," MIDF Research said.

On market performance, MIDF Research said February 2025's total industry volume (TIV) had a 30.8 per cent month-on-month rise to 63,906 units due to a longer working month and was broad-based in nature while year-on-year (y-o-y) saw a 1.7 per cent fall.

"This represents 14 per cent of the full-year forecast of 792,000 units, a three per cent y-o-y decline, in line with expectations amid an anticipated easing of order backlogs.

"Honda's auto sales more than doubled, Perodua rose 35 per cent m-o-m, followed by Toyota (21.3 per cent) and Proton (19.4 per cent). In contrast, Mazda and Nissan saw declines of 9.8 per cent and 16.2 per cent, respectively.

"Only Perodua and Honda recorded a y-o-y rise in TIV, up 14.9 per cent and 12.6 per cent, respectively," it said, adding that March 2025 TIV is expected to see further m-o-m improvement, supported by promotional activities leading up to Hari Raya."

February's total industry production (TIP) was 61,545 units, up 8.2 per cent m-o-m but down 6.2 per cent y-o-y, bringing the year-to-date total to 118,444 units, a 16.4 per cent fall from a year ago, it said.

It has a "Neutral" stance, citing an anticipated downcycle.

The projected three per cent y-o-y decline in TIV was broadly in line with Malaysian Automotive Association's 4.5 per cent expected fall, it said.
"Bermaz Auto remains the top pick," it said.