Malaysia’s Vehicle Sales Forecast at 790,000 Units in 2026 as EV Demand Grows

KUALA LUMPUR, JULY 2026 – Malaysia’s automotive industry is projected to record a total industry volume of 790,000 units in 2026, according to Kenanga Investment Bank Bhd.

The forecast represents a modest four per cent decline from the previous year and is in line with the Malaysian Automotive Association’s projection for the domestic vehicle market.

Kenanga Investment Bank said global fuel prices had begun easing gradually following talks aimed at reaching a peace agreement between the United States and Iran. However, energy markets remain exposed to geopolitical uncertainty in West Asia and possible disruptions to shipping traffic through the Strait of Hormuz.

Despite the uncertain global environment, the investment bank expects the impact on Malaysia’s domestic vehicle sales to remain limited. Eligible motorists continue to receive subsidised RON95 petrol at RM1.99 per litre under the BUDI MADANI RON95 programme.

The monthly BUDI95 quota was reduced from 300 litres to 200 litres beginning April 1, 2026, as the government responded to higher subsidy costs caused by the conflict in West Asia. Government data showed that the revised quota remained sufficient for about 90 per cent of eligible users.

Kenanga Investment Bank also expects the vehicle replacement cycle to increasingly favour electric vehicles. EVs now account for approximately six per cent of Malaysia’s total industry volume, compared with less than one per cent five years ago.

The share of electric vehicles is projected to reach 10 per cent of total industry volume by 2027 as manufacturers increase the local production of battery-electric models, hybrids and plug-in hybrid vehicles.

Greater local production could provide Malaysian buyers with a wider selection of electrified vehicles while supporting the development of the country’s EV manufacturing and supply-chain ecosystem.

Kenanga Investment Bank also expects changes to fuel subsidies to influence future purchasing decisions. Some motorists may consider smaller vehicles, electric models or motorcycles as they look for more economical transportation options.

Meanwhile, the government’s decision to reduce the subsidised diesel price is expected to support the commercial vehicle segment, particularly lifestyle pickup trucks. This category was significantly affected by the introduction of targeted diesel subsidies in June 2024.

From July 1, 2026, eligible Malaysian motorists have been able to purchase subsidised diesel at RM2.10 per litre nationwide under the BUDI MADANI Diesel programme. The initiative uses MyKad verification to ensure the subsidy reaches qualified recipients.

Commercial vehicles currently represent only six per cent of Malaysia’s total industry volume, down from 11 per cent five years ago. The more affordable subsidised diesel price could encourage a gradual recovery in selected segments, particularly among private pickup-truck users and businesses that depend on diesel-powered vehicles.