Proton and Perodua Poised to Dominate Malaysia’s Auto Market Through 2026

Hong Leong Investment Bank (HLIB) forecasts that Malaysia’s automotive industry will hit a total industry volume (TIV) of 800,000 units in 2026, with Proton and Perodua expected to sustain their commanding sales momentum through the second half of the year.

According to the original publisher, the national manufacturers continue to benefit from strong market positioning and competitive product lineups. Perodua remains the leader in the entry-level and affordable vehicle segments, while Proton is seeing significant growth fueled by the introduction of its new Saga replacement model and an expanded portfolio of affordable electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs).

Market data for July 2026 highlights the resilience of the local industry. The Malaysian Automotive Association (MAA) reported that 73,615 units were sold during the month, representing an 8% increase over June and a 5% rise compared to July 2025. This brings the year-to-date sales tally to 458,968 units, marking a 3% increase year-on-year. Notably, EVs accounted for 9.4% of the July TIV, with 6,900 units sold, primarily driven by strong demand for Proton and BYD models.

While the national giants enjoy continued success, HLIB notes that non-national carmakers remain under significant pressure. The market environment is increasingly defined by aggressive pricing strategies and rapid product enhancements that favour local brands. This trend is expected to persist as competition for the middle-class consumer intensifies throughout the remainder of the year.

For the average Malaysian consumer, this outlook suggests a market where affordability remains the primary driver of purchase decisions. With the national brands focusing on budget-friendly models, buyers may find fewer reasons to pivot toward more expensive imported marques, especially as inflation remains steady at 1.8%. The prospect of further price adjustments, such as the reported RM4,700 reduction in the price of the Perodua Axia, is likely to keep the pressure on non-national competitors to offer better value to maintain their market share.

For the broader economy, the sustained performance of the automotive sector serves as a stable indicator of domestic consumer confidence. Despite the cost of living considerations—such as current fuel prices ranging from RM2.05 under the SKPS scheme to RM3.77 for unsubsidised petrol—the automotive market appears resilient. The 6% real GDP growth recorded in the latest quarter suggests that wage earners and SMEs are continuing to commit to high-value purchases like vehicles, supported by an unemployment rate that has held at a manageable 3%.

Looking ahead, the industry is closely watching the dynamics between official MAA figures and higher road transport department (JPJ) registration data, which often includes recon and grey-market vehicles. Kenanga Investment Bank supports the 800,000-unit annual TIV projection, noting that the market is primed for a boost as consumers react to recent price drops in the entry-level segment.

The interplay between the electrification push and traditional combustion engine dominance remains a key area of interest. While EVs are capturing a growing share of the monthly TIV, the extent to which Proton’s shift toward PHEVs and EVs will draw buyers away from cheaper, traditional gasoline vehicles is not yet fully clear. Furthermore, it remains to be seen whether non-national manufacturers will introduce deeper discounts or financing incentives to stave off the ongoing erosion of their market share.