Auto Sales Slump in Jan 2025, But xEVs Gain Ground

According to new data logged into the Data.gov.my portal, Malaysia’s automotive industry recorded a total of 53,930 vehicle registrations in Jan 2025, marking a sharp 36.1% decline from the 84,425 units registered in Dec 2024. Compared to Jan 2024, which saw 66,323 units recorded, this represents an 18.7% drop, indicating a slower start to the year.

Petrol-powered vehicles continue to dominate the market, with 47,093 registrations, accounting for 87.3% of total sales. However, this figure was down 34.3% from 71,685 units in Dec 2024 and reflected a 23.7% decline compared to Jan 2024’s 61,753 units. Despite the drop, petrol cars remain the preferred choice for the masses, largely due to the affordability and availability of accessible models from both Proton and Perodua.

Hybrid petrol vehicles registered 2,249 units in Jan 2025, making up 4.2% of total registrations. This was a 34% decrease from Dec 2024, which saw 3,405 units sold. However, this also marked a 7% increase compared to Jan 2024’s 2,101 units.

The steady rise in hybrid adoption suggests that consumers are gradually embracing fuel-efficient and environmentally friendly options that offer transitional solutions before full electrification.

Electric vehicle (EV) registrations stood at 1,691 units, representing 3.1% of the total. This was a 34.5% drop from Dec 2024’s 2,581 units but showed a significant 20.5% growth from Jan 2024, when only 1,403 EVs were registered.

The increase is fueled by the much-anticipated deliveries of the Proton e.MAS 7 which accounted for one-third of EVs registered in Jan, coupled with government incentives and the ongoing expansion of charging infrastructure, particularly in urban areas.

Diesel vehicle registrations remained the lowest, with only 372 units, accounting for 0.7% of the total. This was a 38.5% decline from 605 units in December 2024, reinforcing the trend of consumers moving away from traditional diesel engines.

Green Diesel vehicles saw 2,525 registrations, making up 4.7% of total sales. However, this was a steep 61% decline from Dec 2024, when 6,469 units were registered. The drop in both the Diesel segment is largely attributed to the diesel fuel rationalisation program, which resulted in higher fuel prices.

The Jan 2025 data highlights the continued dominance of petrol vehicles but also signals a gradual shift toward greener transportation. xEV (EV & Hybrid) registrations are showing steady long-term growth despite short-term fluctuations. However, the direction of Malaysia’s automotive industry will depend on evolving government policies and fuel pricing trends.

This year, xEV adoption is expected to surge, largely driven by the expiration of EV tax incentives in Dec 2024. The government’s new direction, which includes possible incentives for transitional offerings, will likely encourage the launch of more hybrid models, including HEVs, EREVs, and PHEVs, by various brands.

At the same time, the government is pushing automakers to assemble their EV models locally (CKD) to benefit from extended tax breaks until 2027. However, concerns have been raised about what will happen beyond 2027, as CKD investments require long-term justification due to high costs.

To sustain xEV adoption, the government will likely introduce further policy adjustments and incentive extensions later this year. Authorities will be keen to avoid repeating the 2014 hybrid vehicle incentive phase-out, which caused hybrid sales to plummet and led the market back toward conventional petrol and diesel options.

Maintaining momentum in electrification will require a well-planned and sustainable approach to incentives and infrastructure development.