As the US-China tariff war intensifies, Chinese automakers and parts suppliers are expected to shift their focus toward tariff-friendly regions such as Southeast Asia (ASEAN).
With this Malaysia is likely to emerge as a key destination under this strategy, according to CIMB Securities, triggering a surge in competitively priced Chinese vehicles and components in the name of - offloading excess capacity.
While the influx is set to benefit Malaysian consumers in the short term especially when it comes to gaining early access to advanced EV technologies, the firm cautions that it will also intensify pressure on existing market players especially the legacy brands.
In the last couple of years, Chinese brands such as BYD and Chery have already gained ground in Malaysia through a combination of scale-driven cost advantages, advanced features, and aggressive pricing.
In turn, this has unsettled established Japanese, South Korean, and European marques especially given that most of these newcomers are gaining favorable government support to ease their entry into the market.
However, amid this increasingly competitive landscape, CIMB Securities believes that national brands like Perodua are well-positioned to defend and potentially expand their market share.
Perodua’s strength lies in its high local content and affordable pricing structure, which help cushion the brand from swings in import costs and currency movements — a critical advantage as Malaysian consumers grow more price-sensitive.
Things could swing into Perodua’s favour further if budget-conscious buyers pivot toward locally produced alternatives over foreign imports.
However, on the broader trade front, CIMB Securities expects Malaysia’s auto sector to face limited direct exposure to the Trump administration's reciprocal tariff policy. This is thanks to our modest export volume of fully assembled vehicles and auto parts.
Having said that, there are still potential indirect impacts in the form of imported inflation, higher operating costs, and a slowdown in consumer demand thanks to the weakened ringgit.
Furthermore, should this tariff war prolong, it could drive up the price of imported completely knocked down (CKD) kits, components, and fully built vehicles leading to automakers either absorbing the cost or passing it on to consumers.
Credit driven consumer sentiment could also be weaker when it comes to new vehicle bookings.
Given these uncertainties, CIMB Securities has maintained a ‘Neutral’ outlook on the Malaysian auto sector, citing subdued growth prospects amid intensifying competition.
Source: NSTP
