CIMB Securities projects a steeper 7% drop in TIV for auto sector this year

KUALA LUMPUR: CIMB Securities is forecasting a sharper decline of seven per cent in total industry volume (TIV) for the automotive sector, projecting it to reach 760,000 units in 2025, compared to the Malaysian Automotive Association's (MAA) estimate of 780,000 units.

In a research note today, the stockbroking firm said the projected decline is driven by several factors, including the potential removal of the RON95 petrol subsidy in mid-2025, which could impact consumer purchasing power.

Despite this, it expects resilient demand in the sub-RM100,000 vehicle segment, which remains predominantly dominated by national brands and select entry-level models from Japanese automakers.

MAA has forecast a 4.5 per cent drop in TIV this year, citing global economic uncertainty, exacerbated by the ongoing US-China trade war, as a key factor contributing to the expected decline.

The association also noted the government's deferment of the revised open market value (OMV) calculation method from January 2025 to January 2026.

"We view this deferment as a temporary positive for the auto sector, given that MAA estimates the new OMV calculation could increase the average selling prices of locally assembled vehicles by 10-30 per cent," said CIMB Securities, adding that the deferment alleviates immediate pricing pressures.

CIMB Securities' forecast also takes into account a stable overnight policy rate for 2025 and the government's plans to retain fuel subsidies for 85 per cent of RON95 users, as outlined in Budget 2025.

"This policy is expected to ensure affordability for the mass-market segment, allowing national brands to maintain a dominant market share, which is projected at 64.5 per cent in 2025 compared with 35.5 per cent for non-national brands."

CIMB Securities has maintained a "Neutral" rating on the auto sector, amid intensifying competition from Chinese players.

It continues to favour Sime Darby as its top pick in the sector, citing its earnings-accretive acquisition of UMW Holdings, expanding exposure to Australia's mining sector, and potential asset monetisation initiatives.