Vehicle sales in Malaysia are forecast to grow 1.7% year-on-year to about 835,000 units in 2026, bucking an expected contraction in the broader Asia-Pacific automotive market, according to BMI.
The research firm expects Malaysia’s growth to moderate from the record 820,752 vehicles sold in 2025, reflecting a high base following two years of strong sales rather than a significant weakening in underlying demand.
National brands, including key Perodua and Proton models, are expected to continue supporting sales, while steady employment conditions, fuel subsidies, promotional activity and new model launches should sustain showroom demand.
BMI also expects intensifying competition from Chinese automakers and other new-energy vehicle brands to encourage greater price competition in the Malaysian market.
The relatively resilient Malaysian outlook contrasts with the wider Asia-Pacific region, where total vehicle sales are forecast to decline 0.5% in 2026 before recovering by 1.2% in 2027.
Passenger vehicle sales across the region are expected to fall 0.6% this year, while commercial vehicle sales are forecast to edge 0.1% higher. BMI said weaker sales in mainland China would be the main drag on regional volumes.
China’s vehicle market is projected to contract 1.7% in 2026 amid softer domestic demand, reduced policy support for lower-cost and electrified vehicles and intense competitive pressure. Given the size of the Chinese market, the decline is expected to have an outsized effect on regional sales.
EV Adoption Continues To Broaden
BMI expects Asia-Pacific to remain the global centre of electric vehicle adoption, led by China, but sees growth increasingly broadening into India, Thailand, Indonesia, Malaysia and Vietnam.
Affordability, localisation and charging infrastructure will be key determinants of adoption, particularly in emerging markets, with lower-cost battery electric vehicles, plug-in hybrids and range-extended models expected to gain traction.
For Malaysia, BMI highlighted the end of tax exemptions for completely built-up electric vehicles from Jan 1, 2026 as a regulatory shift that could strengthen the relative position of national and locally assembled models.
Incentives for completely knocked-down and locally assembled EVs remain in place until the end of 2027, supporting continued local EV investment and production.
Across the region, Sri Lanka and Pakistan are forecast to record the strongest vehicle sales growth in 2026 at 52.4% and 40.2%, respectively, followed by Vietnam at 15% and Brunei at 9%.
Indonesia, meanwhile, is expected to see sales decline 6.6%, while the Philippines is forecast to contract 8.7%.
