A TWO-SPEED automotive market locally is being played out as expected in calendar year 2024 (CY24) and could stay the same until next year.

“It will be business as usual for the affordable segment as its target customers, which is the B40 group, will be spared the impact of the impending fuel subsidy rationalisation and could also potentially benefit from the introduction of the progressive wage model,” said Kenanga Research (Kenanga) in the recent Sector Update Report.

The pay rise for most civil servants (top management will receive a 7% rise, while those in professional and executive roles see a rise of 15%) in Dec 2024 will also partially restore their spending power eroded by high inflation. 

However, the same cannot be said for the mid-market segment as its target customers may hold back from buying a new car, or they may down trade to a smaller car or switch to an EV to cut their fuel bills upon the introduction of fuel subsidy rationalisation.

“The implementation of e-invoicing is having a lesser impact on car sales than we initially believed,” said Kenanga.

Automakers are racing to provide discounts and rebates to ensure sustained demand and lessen the impact of e-invoicing on consumer sentiment. 

E-invoicing essentially will put the stop to the common practice of providing 100% hire purchase financing. 

Meanwhile, the recent strengthening of MYR against USD is expected to take effect in reducing the costs for automotive parts in the second half of 2025 as automakers usually procure inventory six months ahead of production to ensure supply sustainability.

Vehicle sales will also be supported by new battery electric vehicles (BEVs) that enjoy SST exemption and other EV facilities incentives up until CY25 for complete build up and CY27 for complete knockdown.

The new registration for BEVs leapt from 274 units in CY21 to over 3,400 units in CY22, 10,159 units in CY23, and almost 16,000 units for 9MCY24 , or 3% of total industry volume (TIV).

“We expect more favourable incentives from the government which has set a national target for EVs and hybrid vehicles of 15% of TIV by CY30 and 38% by CY40,” said Kenanga.

Meanwhile, the government will speed up the approval for charging stations. The number of proposed charging stations currently at 4,225 (3,354 built as of to-date) should almost triple to 10,000 by the end of CY25. —Dec 9, 2024

https://focusmalaysia.my/mid-market-car-buyers-likely-to-switch-to-evs-amid-fuel-subsidy-changes/