T15 Fuel Subsidy Criteria May Foster Vehicle Downgrades Or EV Purchases

The upcoming finalization of eligibility requirements for the T15 fuel subsidy, expected mid-2025, may cause buyers to reconsider their car choices. MIDF Research anticipates that consumers may opt for electric vehicles (EVs) or cheaper internal combustion engine (ICE) models, particularly before tax incentives for fully imported (CBU) EVs end this year.

The introduction of new excise duties on completely knocked-down (CKD) automotive components in January 2026 is expected to drive up the prices of CKD vehicles by 10 to 30 percent. According to the investment bank, this price increase will put additional pressure on consumers and could further intensify the shift away from new car purchases.



MIDF Research observed that the total industrial volume (TIV) for February 2025 saw a month-on-month increase of 30.8%, reaching 63,906 units, mainly due to the longer working month.

However, there was a year-on-year decrease of 1.7%. The February total represents 14% of the full-year forecast of 792,000 units, indicating an expected 3% year-on-year decline. This aligns with  predictions, which anticipated a gradual reduction in order backlogs within the automotive sector, it says.




The government is aiming to save RM8 billion annually by cutting subsidies for the T15 group, including those for RON95 fuel. This group, representing the top 15% of families by income, was classified under the "T15" designation in Budget 2025 as part of the government's targeted subsidy and reform efforts.