Malaysia’s total industry volume (TIV) for vehicle sales declined 15% month-on-month (MoM) in May 2026, pressured by a shorter working month caused by a series of public holidays, according to a report by Kenanga Research.
The research house said vehicle sales also fell 12% year-on-year (YoY) in May, as multiple holidays including Workers’ Day, Hari Raya Aidiladha, Wesak Day and the Yang di-Pertuan Agong’s Birthday occurred closer together compared with the same period last year.
However, Kenanga expects vehicle sales momentum to recover strongly in June 2026, supported by attractive promotional campaigns held in conjunction with the Kuala Lumpur International Mobility Show (KLIMS) 2026.
Among key automotive players, Toyota recorded a 17% MoM increase in sales during May, although sales were down 12% YoY. Kenanga attributed the improvement to demand for the newly launched value-for-money Toyota Yaris Cross in both hybrid electric vehicle (HEV) and petrol variants.
Proton sales declined 10% MoM but increased 27% YoY, supported by continued strong demand for its electric vehicle (EV) offerings, which remained dominant in Malaysia’s EV segment.
Meanwhile, Perodua was the most affected by the extended public holidays, with sales falling 24% MoM and 22% YoY.
Despite the weaker monthly performance, national automotive brands strengthened their position, accounting for 67% of total industry volume share compared with 64% during the first five months of 2025.
Perodua maintained the largest market share at 41%, although lower than 45% previously, while Proton expanded its share to 26% from 19%, driven by sustained demand for affordable vehicles and new model launches.
In the non-national segment, Toyota led the market in May with a 31% share, followed by Honda at 20%. BYD matched Mazda at 6% market share, with Kenanga noting that BYD’s lower ready-built imported vehicle inventory affected deliveries despite strong demand.
Chery ranked fifth with a 4% share, amid increasing competition from new launches and aggressive promotional campaigns among non-national brands.
Discounting Trend and New EV Players Reshaping Market
Kenanga said the automotive industry is entering a new phase where discounts and rebates are increasingly being used by manufacturers to capture market share, potentially putting pressure on profit margins.
The research house noted that automakers are adapting by shifting focus towards higher-margin segments. Sime Darby, for example, is benefiting from stronger industrial business margins, while Bermaz Auto is focusing on completely built-up (CBU) vehicles that are less affected by open-market-value (OMV) policy changes.
Hong Leong Industries is also expected to benefit from the premium motorcycle segment, which continues to show resilient demand.
Kenanga highlighted that Malaysia’s upcoming OMV excise duty regulation, expected to be gradually implemented from July 2026, remains a key industry development. However, the policy framework to limit vehicle price increases is still being developed and may be delayed beyond the election period.
Chinese automotive brands are also expected to gain further market share as localisation programmes expand. This includes brands such as Chery and Jaecoo through the Chery Shah Alam assembly plant, as well as Xpeng, GWM, BAIC, SAIC and BYD through local assembly initiatives.
Affordable Segment Remains Key Driver
Kenanga said demand for affordable vehicles remains strong, with national marques expected to maintain dominance with an estimated 65% market share in 2026.
The research house expects non-national brands to continue focusing mainly on vehicles priced above RM100,000.
The introduction of new hire purchase loan policies, including the abolition of the Rule of 78 and flat-rate loan structure, is also expected to create a fairer lending environment and improve consumer confidence over the longer term.
Industry earnings visibility remains positive, supported by a vehicle booking backlog of around 205,000 units as at end-February 2026, above the average backlog of 140,000 units recorded in 2025.
More than half of the backlog consists of newly launched models, reflecting continued consumer interest in new offerings.
EV Adoption to Rise Gradually
On electric vehicles, Kenanga expects Malaysia’s transition towards battery electric vehicles (BEVs) to continue gradually, supported by tax incentives for locally assembled EVs.
However, the research house believes EV adoption may take longer than initially expected due to infrastructure challenges and affordability considerations.
Malaysia recorded significant EV growth, with registrations increasing from 270 units in 2021 to 44,813 units in 2025, representing about 5.5% of total industry volume.
Year-to-date April 2026, EV sales reached 20,254 units.
The government aims for EVs to account for 20% of new vehicle sales by 2030 and 80% by 2050, including hybrid vehicles, alongside efforts to expand charging infrastructure.
Kenanga Maintains Positive Outlook on Selected Auto Players
Kenanga maintained its positive view on selected automotive counters, naming Bermaz Auto Bhd and Hong Leong Industries Bhd as its preferred picks.
Bermaz Auto was favoured due to strong demand for Japanese domestic market models, while Hong Leong Industries is expected to benefit from growth in the premium motorcycle segment.
The research house highlighted that both counters offer attractive dividend yields, estimated at 9% and 5% respectively.
