KUALA LUMPUR, Sept 23 — CIMB Securities Sdn Bhd expects the new RON95 subsidy mechanism to provide near-term support for the automotive industry.
It said the government’s move to reduce the price of subsidised RON95 petrol to RM1.99 per litre is aimed at maintaining fuel affordability for Malaysians.
“This is expected to support demand for mass-market internal combustion engine (ICE) vehicles. With the subsidy capped at 300 litres per month per citizen, a level that over 99 per cent of drivers do not exceed, car usage remains largely unaffected, particularly for small and mid-sized fuel-efficient models,” CIMB Securities said in a note today.
Over the long term, the policy is likely to underpin sales momentum in the national car segment, including Proton and Perodua, as well as entry-level Japanese brands.
“We foresee potential upside to our 2025 total industry volume (TIV) forecast, as our initial assumptions had factored in a potential drag on new vehicle sales from the removal of petrol subsidies.
“That said, the 300-litre monthly cap introduces a behavioural threshold: heavy users such as long-distance commuters, logistics operators, and premium car owners will face higher effective fuel costs beyond the limit,” it said.
The subsidy policy may drive a shift towards more fuel-efficient cars, hybrids, and electric vehicles (EV).
For automakers, the measure provides near-term demand stability but could accelerate a structural transition in the product mix towards efficiency and electrification.
“This trend would favour brands already expanding their cleaner mobility offerings. Proton has launched its e.MAS 7 EV and plans a second EV model by end-2025, while Perodua is preparing to debut its first EV within the same timeframe,” CIMB Securities said.
Meanwhile, Kenanga Investment Bank Bhd said the new subsidy mechanism could reduce the urgency of EV adoption in favour of ICE vehicles, as the government moves away from an income-based rollout.
“Compared with the previous expectation of income-targeted subsidies, this move may dampen the strong sales growth enjoyed by EVs over the past two years. One key selling point for EVs was the assumption that the T10 income bracket would be excluded from the subsidy,” it said.
Kenanga noted that EV owners could potentially save 11.4 to 28.3 per cent annually compared with petrol cars, with even greater savings against RON97 fuel. On the positive side, uncertainty in the mid-market vehicle segment is likely to ease.
“Despite intense pricing competition from Chinese brands, which have flooded the market with attractive value-for-money launches, more sales may shift towards ICE vehicles, given their largest exposure to affordable models,” it said.
The bank also cautioned that the subsidy could undermine sustainability goals, given the uncertainty over the scheme’s duration.
“The measure could delay targets to reduce greenhouse gas emissions from the transport sector as envisaged in the Low Carbon Mobility Blueprint, and counterbalancing measures may be needed to promote EV adoption,” Kenanga said.
