news-cars-bikes-trucks

Analysts: RON95 subsidy removal may add speed bumps to vehicle sales

KUALA LUMPUR: THE government's planned removal of the RON95 petrol subsidy in mid-2025 could affect automotive industry sales, an analyst said.

The measure, announced in the 2025 Budget tabled on Oct 18, will likely affect primarily the premium to luxury market segment.

"We anticipate that the potential removal of the RON95 petrol subsidy in mid-2025 could impact total industry sales volume (TIV), primarily affecting the premium to luxury marke  segment, as the government aims to target the top 15 per cent of users by income level," CIMb securities automotive analyst Mohd Shanaz Noor Azam said.

However, Mohd Shanaz believes that the removal of the RON95 subsidy could accelerate the adoption of battery electric vehicles (BEVs) in the Malaysian market.

He expects Sime Darby Bhd to be a key beneficiary of this trend due to its expanding electric vehicle (EV) model offerings across various brands including BMW, Mini, Porsche, BYD and Volvo.

Meanwhile, CIMB Securities expects continued strong demand for national brands like Proton and Perodua, driven by first-time car buyers and the mass-market segment, as the government plans to retain the subsidy for the remaining 85 per cent of RON95 users.

Mohd Shanaz noted that the government is maintaining the existing EV incentive programme for both completely built-up (CBU) and completely knocked-down (CKD) models.

The government previously introduced full import and excise duty exemptions for CBU EVs until Dec 31 next year, while CKD EVs enjoy full excise duty exemptions and a sales tax waiver until Dec 31 2027.

As a result, he expects rising competition among EV players looking to take advantage of the final year of duty exemptions for CBU models before transitioning to local assembly programmes

in 2026.

"Moreover, Proton is planning to launch its EV model by the end of 2024, while Perodua is targeting the introduction of its maiden EV model by the end of 2025," he said.

On Oct 18, Prime Minister Datuk Seri Anwar Ibrahim said during his 2025 Budget announcement in Parliament that he encouraged Malaysians to transition to EVs.

He highlighted that the government had updated the EV tax incentives to motivate people to choose locally-made CKD electric vehicles, especially since Perodua was planning to create its own EVs.

To support the effort, Investment, Trade and Industry Ministryis stepping in to help Perusahaan Otomobil Kedua Sdn Bhd (Perodua) produce Malaysia's first EV that will be priced under RM100,000.

Its minister Tengku Datuk Seri Zafrul Abdul Aziz reportedly said that the ministry was hopeful that Perodua would hit its goal of producing the EV by the end of 2025.

Proton, meanwhile, reportedly said ts first production battery-electric vehicle  called e.MAS 7 would be launched before the year is out, and that it will be based on the Geely Galaxy E5.

The order books for e.MAS 7 were opened on Oct 26, although some dealers such as EON might have already accepted bookings before that.

Most Popular
Related Article
Says Stories