Sime Darby Struggles as China’s Auto Oversupply Hits Hard

Sime Darby Bhd is bracing for a challenging year in its motors division as a flood of vehicles from China drives up competition.

Group CEO Datuk Jeffri Salim Davidson said Chinese carmakers are producing far more cars than the market needs, leading to an oversupply that’s spilling into other countries. With China already facing difficulties, he expects competition to get even tougher elsewhere.

In response, Sime Darby has been making adjustments. Managing director of Sime Darby Motors, Andrew Basham, said the company shut down nine branches in China in the first half of FY2025, with a few more closures expected soon.

Sime Darby has multiple brand dealerships in China representing brands like BMW, MINI, Rolls-Royce, Lamborghini, McLaren, Volvo, smart, Genesis, Polestar, Li-Auto and Tesla.

The slowdown is already hitting the company’s bottom line. For the first half year ended 31 Dec, 2024, revenue in the motors division fell to RM17.45 billion from RM18.80 billion a year ago.

The Chinese market was the hardest hit, with weaker sales and shrinking profit margins. Despite this, the division continues to see steady contributions from markets like Malaysia, Australasia, and Singapore.

Still, there are signs of hope. Sime Darby expects China’s auto market to pick up, thanks to new trade-in policies, lower borrowing costs, and more affordable EVs. But the road ahead won’t be easy—competition remains fierce, discounts are deep, and demand is still shaky.

Furthermore, as part of its long-term growth strategy, Sime Darby is focusing on the rapidly expanding EV market. Datuk Jeffri revealed that the company plans to launch its first Perodua EV in December 2025, with testing set to begin in June.

The model thus far has received positive feedback gauged from the recent automotive exhibitions.

Additionally, Sime Darby’s EV expansion is already gaining traction, particularly in Singapore and Malaysia, where BYD electric vehicle sales are on the rise. In Malaysia alone, BYD sales are expected to hit 1,000 units per month by mid-2025, further strengthening the company’s position in the EV space.