Rocky road ahead

PETALING JAYA: Malaysian automotive players remain wary of the sector’s outlook for the year ahead, amid heightened price competition and margin pressures.

Bermaz Auto Bhd (BAuto) executive chairman Tan Sri Ben Yeoh said the outlook for the automotive market for the remainder of 2025 is expected to be challenging.

“The influx of new brands has resulted in high levels of price competition, including inventory build-up and this has contributed to customer purchase confidence,” he told StarBiz.

Yeoh added that price competition and discounting remain intense, particularly among new entrants seeking to gain a foothold in Malaysia.

“This has pushed residual values of cars down, affecting also the secondary used car market. We believe the market adjustment will take place towards the last quarter of 2025.”

Yeoh said rising consumer interest in electrification, advanced technology and value-for-money offerings will continue to drive demand for legacy brands with transitional products such as hybrid, mild hybrid and plug-in hybrid electric vehicles (EVs).

“The priority will be to maintain customer trust and deliver consistent ownership experiences to stand apart in an increasingly competitive market.”

Meanwhile, Sime Darby Bhd, a prominent player within the automotive industry, said it is already seeing sector headwinds.

“In the automotive segment, China remains tough where the rapid rise of domestic EV players has triggered aggressive price competition and margin pressures,” said the company in an e-mail reply to StarBiz.

Sime Darby’s automotive division comprises BMW, MINI, Hyundai, Ford, Jaguar, Land Rover, Porsche, Volvo and BYD.

Since 2004, the group has been assembling Hyundai vehicles under the Inokom brand at its assembly plant in Kulim, Kedah.

The group has also included certain BMW, MINI, Mazda and Ford models to its assembly line-up.

Sime Darby acquired UMW Holdings Bhd in March 2024, giving the group control over UMW’s shares in automotive brands Toyota and Perodua.

Commenting on the challenging automotive market outlook, Sime Darby said it is “beginning to see some early light” as the situation takes time to stabilise.

“BMW continues to hold strong market share in the market, and we have taken steps to consolidate operations and improve inventory management. With measures by the Chinese government to curb overproduction and discounting, we expect to see gradual improvement over the longer term.”

At the same time, Sime Darby said it has seen bright spots across its motors division.

“Our sales in Singapore are strong, led by BYD, the number one EV brand, and BMW, the number one premium brand, in the market.

“In Malaysia, despite intense competition, we continue to remain resilient. This is also supported by Sime UMW’s strong Perodua and Toyota brands, which continue to lead in Malaysia’s automotive market.”

Even with the increased competition, the company said it is working harder to defend its market share.

Meanwhile, BAuto, which is principally involved in the distribution of Mazda, Kia and Xpeng vehicles, saw its net profit for the first quarter ended July 31, 2025 plunge to RM8.28mil from RM70.22mil in the previous corresponding period.

Revenue, meanwhile, dropped to RM491.28mil from RM846.18mil a year earlier.

In a filing on its first-quarter financial performance announced last week, the company said group revenue declined by RM354.9mil (down 41.9%) largely due to lower sales volume in the domestic operations for certain Mazda and Kia vehicles, which are nearing the end of their product life cycles and aggravated by the highly competitive market conditions such as the influx of Chinese-made vehicles with their low pricing strategy.

Nevertheless, Yeoh remains hopeful that the company will hit its sales targets for this year.

“Yes, hopefully we are on track to meet our sales targets. This is driven by the introduction of new models, price adjustments supported by Mazda Motor Corp and cost-down efforts across the supply chain.

“Our product strategy also ensures continuity, with the CX-5 2.0L and CX-8 2.5L continuing for another three and a half years alongside the new CX-5, which features a larger engine capacity and newer larger platform to meet evolving customer needs.”

Yeoh said the group’s performance so far this year has been within expectations.

“Under these challenging circumstances, we believe our total sales volume remains within expectations, with an approximately 7,500 units sold to date and based on the current trend, we are confident that we will be able to achieve our annual forecast volume by end of 2025.”

Sime Darby reported a net profit of RM2.06bil in its financial year ended June 30, 2025 (FY25) compared to RM3.3bil in FY24.

The company noted that the decline was mainly due to the absence of the one-off RM2bil gains from the sale of Ramsay Sime Darby Health Care recorded in FY24.

“The motors division was impacted by ongoing tough conditions particularly in China, as well as Australasia and Malaysia, amid weaker demand and intense competition.

“On the bright side, EV sales saw an increase in Singapore, benefitting its number one EV brand, BYD, which we represent.”

Meanwhile, it said Sime UMW was a strong contributor in FY25, driven by the robust performance of both Perodua and Toyota.

“These results reflect the resilience of our portfolio and the strength of our geographical diversity. Even as we navigated multiple headwinds, we delivered solid earnings.

“With proactive steps to optimise inventory, reduce costs and improve operating cash flow, we are in a solid position to maintain our strong market standing and drive sustainable growth, going forward,” said the company.

According to the Malaysian Automotive Association (MAA), sales for Malaysia’s automotive sector jumped 28% to 70,057 units in July, compared with 54,863 units in June,

The MAA said in a statement that the higher total industry volume (TIV) was attributed to a full working month of 23 working days, compared with 19 working days in June, and low production base in June due to the Hari Raya Aidiladha shutdown.

However, MAA reported that the year-to-date TIV was 5% lower than the same corresponding period last year.

“On a year-on-year basis, the TIV for July was 5% lower than the 73,501 units recorded a year earlier, with 64,438 passenger vehicles and 5,619 commercial vehicles sold,” said the association.