Analyst - OMV Revisions Set to Raise Car Prices, Spark EV Adoption

Malaysia’s total industry volume (TIV) for 2025 is expected to drop by 4% to 755,000 units, according to analysts at CIMB Securities.

This decline is attributed to potential revisions in the open market value (OMV) calculation, which could raise vehicle prices by 8% to 20%, alongside the possible removal of RON95 fuel subsidies.

The OMV revision faced multiple delays, with the last extension possibly ending Dec 31, 2024. Additionally, the removal of fuel subsidies could further encourage battery electric vehicle (BEV) adoption, with Sime Darby’s growing portfolio of EVs, including brands like BMW, BYD, and Volvo playing a key role.

BEV adoption is set to peak, supported by new model launches, greater competition, and duty exemptions for imported EVs, which ends in 2026.

Despite these challenges, national brands Perodua and Proton are projected to maintain a 65% market share, supported by first-time buyers, strong mass-market demand and introduction of national EV offerings. Additionally, subsidies under Budget 2025 for most RON95 users are expected to keep national vehicles affordable.

The automotive sector’s net profit is forecasted to grow by 3% in 2025, primarily driven by Sime Darby. However, CIMB downgraded its rating of the sector from “overweight” to “neutral,” citing slower growth and intensified competition.

Maybank Investment Bank Research meanwhile predicts 750,000 units will be sold in 2025, a slight drop from the estimated 800,000 units in 2024 but still above pre-pandemic levels. Growth is expected to stem from OEMs focusing on affordable models priced below RM100,000.

Additionally, production constraints could also hinder growth as major OEMs like Perodua, Proton and Toyota which are already operating at full capacity to fulfill backlogs. This also gives rise to the need for expanded production capabilities to meet increasing demand.