Steady demand for national marques
PETALING JAYA: Kenanga Research is maintaining a “neutral” stance on the automotive sector, projecting continued strength for national marques Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Proton Holdings Bhd (Proton).
The research house is expecting the brands to increase their combined market share to 64% in calendar year 2025, from 58% in 2022, driven by strong demand for affordable vehicles and a shift in consumer preferences toward value-focused options.
Despite intense competition from non-national marques especially in the premium segment, Kenanga Research maintained its total industry volume forecast of 805,000 units this year, representing a slight 1% year-on-year decline.
Notably however, this estimate exceeded the Malaysian Automotive Association’s projection of 780,000 units – a 4.4% year-on-year decline.
Demand is expected to remain buoyant due to new launches, the deferment of new excise duties to the end of 2025 and broader affordability trends in the lower income group, said Kenanga Research.
In a note to clients yesterday, it pointed out that national car players are gaining traction not only through competitive pricing but also by improving their vehicle specifications.
“Perodua and Proton have outsold non-national brands as they have also caught up in terms of specifications and features such as digital speedometer, fuel-efficient engine, highly-responsive gearbox, advanced driver assistance system, the number of airbags of up to six and anti-theft auto locking system.”
Kenanga Research said Perodua had plans to introduce three new models of under RM100,000, including its first electric vehicle (EV) and a new Myvi, while Proton, leveraging on Zhejiang Geely Holding Group Co Ltd’s platform, is progressing on its EV roadmap in three phases leading to 2030.
Conversely, the research house said non-national brands – targeting the RM100,000 and above segment – faced a more challenging outlook.
“We believe the heavyweights under our coverage are experiencing valuation de-rating due to intense competition in the non-nationals space as well as worsening external factors,” the research house pointed out.
Kenanga Research said foreign players like BYD, Tesla, Chery, GAC and Xpeng are actively launching new electric models, but mass market traction remained uncertain, while localisation efforts such as utilising completely knocked down or semi knocked down assembly are limited.
Of interest, the research house had placed “underperform” ratings on both Sime Darby Bhd and DRB-Hicom Bhd, citing weak margins, growing competition and external pressures such as industrial and property segment losses.
Furthermore, it said the fuel subsidy rationalisation set for the second half of the year could accelerate a “two-speed” automotive market, noting that while the impact on lower-income group would be minimal, the upper income group may delay purchases or switch to smaller vehicles, hybrids or EVs.
Kenanga Research selected MBM Resources Bhd and Hong Leong Industries Bhd as its top picks, with respective target prices of RM6.90 and RM16.70.
It said MBM Resources, as a major Perodua dealer and shareholder, would benefit from strong earnings visibility backed by a 90,000-unit order backlog, while being well-positioned to gain from new model launches and value-conscious consumer trends.
At the same time, Hong Leong Industries, which is tied to the strong Yamaha motorcycle brand, is expected to gain from the gig economy and rising motorcycle demand, projected to hit 700,000 units in 2025.
Kenanga Research said while earnings visibility for the automotive sector remained solid, supported by a booking backlog of 155,000 units as of May 2025, the market is increasingly polarised.