Malaysia's Automotive Production Declines in H1 2025 Amidst Market Challenges

According to foreign media reports, the Malaysian Automotive Association (MAA) announced on July 16 that the country's automotive production for the first half of 2025 fell to 352,626 units, a decrease of 10.1% from 392,220 units in the same period last year. This includes a decline of 11.9% in commercial vehicle production, down to 18,775 units, and a 10.2% drop in passenger vehicle production to 333,212 units. The MAA stated in a press release that the overall decline in automotive production aligns with shrinking new vehicle demand in the market. From January to June this year, Malaysia's automotive sales also saw a year-on-year decrease of 4.6%, totaling 373,636 units, reversing last year's growth trend where sales reached a record high of 816,000 units. In the first half of the year, sales of commercial vehicles dropped significantly by 21%, while passenger vehicle sales fell by 3%. The MAA explained that this contraction was due to the government’s removal of diesel subsidies in June 2024. Despite the decline in sales during the first half, the MAA maintains a sales forecast of 780,000 units for the entire year, supported by three main factors: the ongoing recovery of the Malaysian economy, a recent reduction of the benchmark interest rate to 2.75% by the central bank, and active promotional activities launched by major automotive companies. Notably, Malaysia's electric vehicle market has seen growth in contrast to the overall decline. From January to June, sales of electrified vehicles, including hybrid models, grew by 35.6% year-on-year, reaching 30,573 units. Sales of SUVs also experienced a slight increase, making it the only segment among traditional models to achieve growth. MAA President Mohamad Shamsor noted that the current penetration rate of electric vehicles in the country remains low, with the government's target being to have electric vehicles account for 15% of total vehicle sales by 2030. However, the proposed 25% import tariff by the U.S. government on related goods from China, including cars and parts manufactured in Malaysia, presents new challenges for the Malaysian automotive industry. Shamsor indicated that the major affected area will be the export of automotive parts, which is projected to reach nearly $100 million in 2024, accounting for 80% of Malaysia's total automotive exports to the U.S. (excluding rail and special vehicles).