17/07/2025

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THURSDAY | JULY 17, 2025

xEV penetration in Malaysia set to hit 9.6% by end of year

Economists see M’sian Q2 GDP

growth at 4.5-5.5% KUALA LUMPUR: Economists have projected the Malaysian economy to expand between 4.5% and 5.5% in the second quarter of 2025 (Q2’25), driven partly by increased export demand, especially from US importers due to heightened fears of impending tariff in August. Putra Business School Associate Professor Dr Ahmed Razman Abdul Latiff said the service, manufacturing and construction sectors are likely to contribute the most to Q2’25 growth. “I expect Malaysia’s Q2 gross domestic product (GDP) to show growth. There is also a possibility that the mining and agriculture sectors would make a higher contribution to the economy,“ he told Bernama. The Statistics Department Malaysia is scheduled to announce the advance GDP estimates for Q2’25 tomorrow, followed by an official announcement on Aug 15. However, Ahmed Razman cautioned that the growth momentum could decelerate in the second half of the year (H2’25) once the US tariff comes into effect. Nevertheless, the recent reduction of the Overnight Policy Rate (OPR) might catalyse the domestic market to generate higher demand for products and services, he said. On July 9, Bank Negara Malaysia’s (BNM) Monetary Policy Committee reduced the OPR by 25 basis points to 2.75%, a pre emptive measure to preserve Malaysia’s steady growth path amid moderate in flation prospects. BNM last kept the OPR at 2.75% in March 2023. It was increased to 3% in May 2023. Sharing similar views, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said front-loading activities may benefit Malaysia’s external sector. “We have seen exports to the US jump 33.6% in the first five months of 2025. “This will sustain growth in Q2 2025 along with Malaysia’s full employment status, which will help propel consumer spending, coupled with investment acti vities in the private sector,“ he said. However, Mohd Afzanizam expressed concern that the H2’25 economic con ditions will be more critical with the US tariff effective Aug 1. “We can expect US demand to moderate as Americans will have to pay more for imported goods. The growth moderation will be transmitted in H2 2025,“ he said. Mohd Afzanizam expects 2025 full year growth to slow to 4.1% against BNM’s earlier growth projection of between 4.5% and 5.5% and H2’25 GDP to expand to 3.7%. On July 8, the US unexpectedly im posed a higher tariff of 25% on all Malaysian exports effective Aug 1, one percentage point higher than the 24% announced in April. While negotiations for lower tariffs are ongoing between Malaysia and the world’s largest economy, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said BNM is analysing this year’s economic outlook and the tariff impact, and the official economic outlook remains unchanged. – Bernama

wave of heavy discounting in the domestic car market. “Discounting may help in the short term, but it’s not healthy in the long run, especially for consumers,” he said. Excessive discounts reduce vehicle resale values, affecting early adopters the most, according to him. “It creates an unsustainable sales environ ment. Promotions are necessary to attract buyers, but they shouldn’t be overdone,” he said. Currently, fully imported EVs enjoy import and excise duty exemptions until December this year, while locally assembled EVs benefit from additional tax incentives until 2027. EV owners are also exempt from road tax until the end of 2025, with further incentives offered for home charging infrastructure and industry investments. However, many of these incentives are approaching their expiry, and the MAA is urging the government to extend them to maintain industry momentum. “We’re hopeful that the current subsidies and incentives will be continued. This would allow the industry to plan and support the government’s goal of achieving 15% EV penetration by 2030,” Mohd Shamsor said.

o MAA advocating for longer-term, consistent policy direction as incentives approach expiry

Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

industry could see a spike in last-minute purchases towards the end of the year, followed by a prolonged slowdown. “In the long run, the outlook would be very bearish,” he warned. Mohd Shamsor drew parallels to the introduction of HEV about 15 years ago. “They essentially disappeared from the market for a period until manufacturers developed local assembly capabilities,” he said, adding that local production requires signi ficant planning and cannot be implemented overnight. “This is why we’re advocating for a longer term, consistent policy direction,” he em phasised. Commenting on the potential removal of RON95 fuel subsidies, Mohd Shamsor said it could have a similar impact on the auto industry as the earlier adjustments to diesel subsidies. “On the flip side, it could also prompt more serious consideration of hybrids and EVs.” Mohd Shamsor also addressed the current

KUALA LUMPUR: The penetration of xEVs in Malaysia is projected to reach 9.6% by the end of this year, driven by the launch of new models and increased consumer interest. Malaysian Automotive Association (MAA) president Mohd Shamsor Mohd Zain said xEVs accounted for 8.6% of total vehicle sales in the first half of 2025. “We’ve already achieved around 8.6% xEV penetration in the first half of the year. We’re projecting to close the year at approximately 9.6%, supported by the introduction of new models,” he said in a press conference yesterday. xEV is a collective term for all types of electric vehicles, including hybrid electric vehicles (HEV), plug-in hybrid electric vehicles, battery electric vehicles and fuel-cell electric vehicles. However, Mohd Shamsor cautioned that if EV-related subsidies are discontinued, the

MAA: Impact of US tariffs on auto parts yet to be felt KUALA LUMPUR: The domestic automotive industry has yet to feel the impact of US tariffs on vehicle parts, according to Malaysian Auto motive Association (MAA) president Mohd Shamsor Mohd Zain. systems,” he added. Mohd Shamsor said the main concerns are centred around imported completely knocked down vehicle parts, which could be subject to US tariffs when sourced from multiple countries. the corresponding period of 2024. MAA attributed the decline to a high base effect following last year’s record-breaking total industry volume (TIV) of 816,747 units, alongside a sharp drop in January 2025 sales, which followed a surge in advance purchases in December 2024. Front, from left: MAA vice-president Sarly Adle Sarkum, Mohd Shamsor and vice-president Tan Keng Meng at the press conference to review the performance of motor traders and manufacturers for the first half of 2025. – AMIRUL SYAFIQ/THESUN

He said any potential cost increases or supply disruptions would likely only begin to materialise in about six months. “We haven’t seen any impact so far. If anything, it may not be felt for six months. At this point, we don’t have any clear indication yet,” he told a press conference yesterday. Mohd Shamsor noted that the primary concern centres around motor vehicle parts and accessories, which account for nearly US$100 million (RM424 million) in trade. “This segment makes up about 80% of Malaysia’s total vehicle-related exports to the US, excluding those related to railway and tramway

“This impact may eventually filter down and affect us, potentially leading to slightly higher costs for parts,” he said. As for direct vehicle exports, Mohd Shamsor noted that volumes remain minimal, amounting to only about US$142,000 in 2024. “It’s minimal, mainly due to the differences between left-hand and right-hand drive vehicle specifications.” According to MAA, new vehicle sales in Malaysia fell 4.6% in the first half of 2025 compared to the same period last year. A total of 373,636 units were sold between January and June, down from 391,451 units in

“Advance purchases in December 2024 affected sales in January 2025,” MAA said, highlighting that the highest monthly TIV was recorded in December 2024 with 81,735 units sold, compared to just 50,397 units in January 2025. Commercial vehicle demand also weakened, partly due to the termination of diesel subsidies in June 2024. Sales in this segment fell 21% to 26,552 units. Meanwhile, passenger vehicle sales dipped 3% to 347,084 units. - by HAYATUN RAZAK