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Oil prices are climbing due to the US-Israel War on Iran, putting pressure on Malaysia’s fuel subsidies — and at the same time, logistics costs are rising, pushing up the cost of moving goods and vehicles.

Recently, the “Bangun KL” debate has laid bare a deeper truth: continued congestion shows a system under strain requiring structural and systemic changes.

Taken together, these transport issues are economic. From how we power our cars, to how we move through our cities, to what kind of automotive industry we’re actually building.

Tehmina Kaoosji speaks with Aiman I. Abdullah, Managing Editor, MalaysianMotoring on recent developments across Malaysia’s automotive sector.

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Transcript
00:07Hello and welcome to Niagara Spotlight with me Tamina Kaosji.
00:10Niagara Spotlight takes us to the week in economic analysis and future affairs.
00:14Today on analysis, our spotlight is on the automotive market, trends and challenges.
00:20Now Malaysia's automotive sector is entering a more complicated phase on Q2 of 2026
00:26and it's no longer just about what we drive but what we're building overall.
00:30As global tensions from the US-Israel war on Iran push oil prices higher,
00:35pressure is mounting on petrol subsidies,
00:37forcing a harder look at how quickly the country can transition towards electrification too.
00:42At the same time, questions are emerging around the kind of investments Malaysia is willing to accept,
00:48not just in terms of sales but whether global players, in particular EV market,
00:53are truly committing to local manufacturing, supply chains and also skills development.
00:59Add to that rising logistics costs globally, ongoing congestion challenges at home
01:04and a fast-evolving EV market.
01:07Plenty to discuss.
01:08So where does Malaysia go from here and who stands to gain from the next phase of this transition?
01:12Joining me live in the studios for this very timely discussion is Ayman Ayy Abdullah,
01:17Managing Editor of Malaysian Motoring.
01:19Very good morning to you, Ayman. Thank you for making time.
01:22Thank you very much for having me.
01:23Fantastic. So let's get off the bat while talking about, of course, the EV market and policy signals.
01:30Now, there have been some fairly interesting recently stalled local assembly plans,
01:34in particular for BYD, the EV carmaker.
01:38But this has also raised broader questions across the industry.
01:41From your vantage point, is this about, you know, a company in particular or is METI itself drawing a clearer
01:50line around what it means to have meaningful investments in Malaysia's automotive market?
01:56I think if we look back to the foundation of the Malaysian automotive industry,
02:00if we go back to about the late 1960s when Swedish Motor Assembly started building Volvos here, followed by Tanchong
02:05Motor Assemblies in Segambut,
02:07it was very clear that this is not just about building cars, it's also about skill development, it's also about
02:13knowledge transfer, etc.
02:14And then as we moved towards the National Carmaker Project, which eventually resulted in Proton, Proton was also founded and
02:21established essentially in order to learn from that, to create high value industry.
02:24And so METI's pledge now is ultimately to continue to further that investment, to further those developments, right?
02:33So when it comes to current investments that we're looking at right now, it's very clear to METI that anyone
02:39who wants a part of our market has to meaningfully contribute beyond just money, beyond just cars, beyond just products.
02:46This is a matter of knowledge transfer.
02:48This is a matter of upskilling our industry in order to better prepare for the next generation of mobility, for
02:53electrified vehicles, for electric vehicles, etc.
02:56And so while it may not necessarily be fair to call this a BYD issue specifically, but I think METI
03:01is, as you mentioned, drawing a line in the sand and saying that if you want access to what is
03:05still the largest passenger car market in the region,
03:08then you have to do so with clearer intent that is more than just selling cars.
03:13It has to be about upskilling our industry. It has to be about involving our local players and contributing more
03:18meaningfully to our GDP rather than just flooding the market with new cars.
03:21And we, of course, sell just a little under a million cars domestically each year.
03:27Yes, something. I think at the moment we saw a number last year in excess of 800,000 vehicles, but
03:33we expect that number to slow to somewhere between 7 to 750 this year, or perhaps even up to 780.
03:38But ultimately, we still represent the single largest passenger car market. Thailand may produce more vehicles, but they export a
03:44large number of them.
03:45Whereas when it comes to domestic consumption, we still buy more cars than anyone else in ASEAN, despite being one
03:50of the smallest countries in the region.
03:51Yes, we do love our cars. And of course, with the ongoing petrol related prices, but we'll get into that
03:57a little bit later.
03:58But it's clearly, it's very solid that the fact that Meaty has taken a stance and their clear signal being
04:05given is that if you're not here to invest for the long term, well, basically, there's going to be a
04:12line between that.
04:12Yes, exactly.
04:13Yeah. So let's talk market access versus the ecosystem building part of it, Aiman.
04:18Now, let's get into the fact that, of course, we have historically welcomed automotive players, Toyota, Honda, etc.
04:25But we're now seeing a shift where market access is also being traded for the localization and also the technology
04:31transfer.
04:33What is the overall industry's situation? And is it ready for that recalibration, including more traditional partners?
04:44So I think that it would be perhaps, it may appear to the market now that we're looking more towards
04:50localization, towards local investment and upskilling, as you mentioned earlier.
04:55But the thing is, this has been a policy that's been in place for a long time, as we've done
04:58since basically the late 1980s.
05:00And so it's quite clear that this is not a change in policy as much as perhaps bringing this into
05:06the light and making it very clear that this is what we're demanding.
05:10Malaysia adopts a policy, especially with Miti, they adopt a policy where it is very much customized incentives for each
05:15individual player.
05:16So it depends on very much how much local vendors and local parts are involved and utilized within the production
05:22process, how much your investments are on the ground here.
05:25And so that customizes the incentives that Miti is willing to offer to these different car makers.
05:30It's just that prior to this, these discussions were always held behind closed doors.
05:33They still are. But now certain players are perhaps being a little bit more brazen about the fact that, oh,
05:39we're getting this much or we're being incentivized to do this much, etc.
05:41So they're bringing out these confidential, ultimately, bits and pieces and bringing them out into the light for public consumption.
05:49I think that Miti's requirements with regards to localization and local vendor involvement is slowly creeping up, as it should
05:56be, as it has been over the last 30 years.
05:58And I think that it's come to a point where we have to establish the fact and reinforce the fact
06:02that Malaysia is ultimately the most mature automotive market in Southeast Asia.
06:07We've been building cars longer than everybody else. We have been manufacturing cars for longer than anybody else.
06:12We have exported more talent than anybody else within the region.
06:15And I think that basically Miti is stating very clearly and unequivocally that if you want access to this high
06:20value market, if you want access to a high value labor, then there is going to be a cost associated
06:26with this.
06:26It has to be more than just a matter of building cars.
06:29You have to invest in our market, do so meaningfully and do so in a way that benefits Malaysia beyond
06:34simply market access and beyond having access to more products.
06:36And clearly when it comes to that, so we are effectively moving towards a model where the market access is
06:42conditional and the global players are going to have to reflect and respond appropriately to maintain that kind of access.
06:50So that brings me to looking at the broader picture of dumping risks and regulatory gaps, but in particular, looking
06:57at the excess EV inventory, which is overall also being redirected more towards our region, Southeast Asia in particular.
07:05So how real is the possibility that Malaysia is also becoming a sort of location, an end location for global
07:15oversupply?
07:16Right. So to provide a little bit of context to this, the reason why it is that China has such
07:22an oversupply of vehicles is because in order to get them down to a certain price point, you have to
07:27build in a certain volume.
07:29Definitely.
07:29And because the market in China being as competitive as it is, that means that your minimum order quantity, as
07:33it were,
07:34we're talking in the matter of hundreds of thousands, whereas here we're talking about tens of thousands or sometimes just
07:39within the thousands or even the hundreds for certain low volume manufacturers and low volume products.
07:43And so for them, it is more costly to slow down the production process.
07:47They would rather just continue building these cars and stockpile them wherever and then offload them to any market that's
07:52potentially willing to accept them.
07:53So this sort of integration, this vertical integration of that production process means that they enjoy incredible efficiencies in terms
08:00of cost, in terms of time, which makes the vehicles themselves also a lot more accessible.
08:04The trouble is, if we were to permit our market, if we were to open our doors and to accept
08:09these vehicles, these sort of overspill products from markets like China, where they are suffering from significant oversupply,
08:17we would end up slowly choking our own industry and losing access to about 4% of our national GDP.
08:24The automotive industry contributes that much every year.
08:25And so if you can imagine our roads being overrun with much more affordable cars, yes, but then our ringgit
08:31would be worth less.
08:32And there would be significantly fewer jobs available, especially these high skill, very technical jobs that we've been able to
08:37export with talent, we've been able to export across the globe.
08:39It is a bit challenging for the layman to understand just what this means, because if you were to boil
08:46it down, it just looks like we're saying no to more affordable vehicles.
08:48It doesn't really work like that, because even if the cars were to become more affordable, if your ringgit is
08:53worth less, you're still paying more in the end.
08:56And so this is ultimately about protecting our own interests.
08:59National interests must come first.
09:01And so there is a risk, as much of a risk as anyone else.
09:05But as I mentioned earlier, because Malaysia is such a mature automotive market, it becomes doubly important for us to
09:11be a little bit more protective of our industry and ultimately of fellow Malaysians working within the automotive industry, both
09:16directly and indirectly.
09:17And so these global EV players are also targeting up to half of the sales from overseas market.
09:24What broader protections and safeguards actually prevents Malaysia from becoming sort of a dumping ground for the oversupply?
09:33I think in terms of policy, the policies in place are significant enough.
09:38They're strong enough in order to protect our market from becoming a dumping ground.
09:41Miti's revision at the beginning of this year to limit tax incentives only to EVs beyond 200,000 ringgit with
09:48a certain minimum power output or performance output.
09:51This was enough to signal to the market that we are willing to accept low volume players that will not
09:57significantly or adversely affect our economy.
10:00So brands, for example, like MG with their Cyberster Electric Roadster as well as Lotus with their electric EMEA and
10:07ELECTRA hyper SUVs and hyper saloons.
10:09That's fine because in terms of the volume, this only represents a very small, even less than a percent of
10:14the overall market.
10:15So that's fine.
10:16But if you want to get into the proper meat and potatoes of our market, when we're talking about mass
10:20marketplace, vehicles under 200,000 ringgit, then at that point, you have to make that investment.
10:25And so if you want to import them, you can, but then you're subject to taxes and tariffs, which make
10:29it significantly less attractive, especially against vehicles that are being locally assembled, that are available at better pricing.
10:35And Malaysians being very price sensitive consumers, we will naturally gravitate towards the vehicles that offer the best bang for
10:41buck, regardless of how fancy or interesting the tech might be.
10:44If vehicle A will do the job for a better dollar value, I will end up with that anyway.
10:49That's generally how the Malaysian consumer thinks, how the Malaysian consumer drives their dollar.
10:53And so I do think that the policy in place is good enough.
10:56It is strong enough.
10:57Now it's just a matter of enforcement and ensuring that every player is within, reined in and kept within these
11:04sort of walls, as it were, in order to play nice within our market.
11:08Having a healthy enough market, but at the same time also ensuring that the affordability is not overwhelmed by oversupply.
11:14So that's going to be an interesting sweet spot to me.
11:16We'll go more into subsidy pressure versus the EV urgency in just a tick.
11:22But on that note, though, we take a brief break.
11:24Don't go anywhere because we'll be right back with the rest of Niagara Spotlight, speaking to Ayman Ai Abdullah, Managing
11:30Editor of Malaysian Motoring, on the automotive sector, trends as well as challenges.
11:35Stay tuned.
11:52Welcome back to Niagara Spotlight.
11:54Still with me, Tamina Koushi.
11:55And today we're focusing on the automotive market, looking at trends as well as challenges, and in particular in connection
12:02to the ongoing energy crisis as well.
12:04Well, Ayman, so let's go into looking at subsidy pressure versus the urgency of EV adoption.
12:12Now, there's, of course, rising oil prices and there's a lot of volatility around that with the continued situation in
12:19West Asia.
12:19Now, let's link it to the geopolitical tensions and the fact that petrol subsidies are also under increasing strain.
12:26In your view, over the past quarter, has that also seen an acceleration for EV adoption?
12:34What are the numbers telling us?
12:36Based on market trends, it seems quite clear that following the ideal future celebrations, generally big ticket purchases have slowed
12:43down, not just about cars, but also with regards to property and luxury purchases.
12:48And I think that this reflects the fact that the market is now currently feeling a little bit of anxiety,
12:52there's a little bit of unease, and so they'd rather maintain that liquidity as much as possible rather than make
12:57big ticket purchases now.
12:58However, in terms of moving the automotive market and purchases towards EVs specifically, I think that the global trend has
13:07seen that EVs are slowing down in terms of their overall desirability.
13:10There is significantly fewer sales of desirability. There is significantly fewer sales of EVs globally. In fact, BYD has seen
13:15shrinking over the last few quarters.
13:17In fact, last year, I believe there was an overall shrinkage, despite export markets growing significantly for them.
13:24But ultimately, I think that now it is a question of how far can my leader take me, which is
13:29why we've seen significantly greater interest within plug-in hybrids and hybrids in general.
13:34These are vehicles that are able to maximise every litre, while not requiring a significant lifestyle change in terms of
13:40plugging in or setting up your home to have the necessary infrastructure to charge your vehicle.
13:45And so I think that generally the market sensitivity right now may not necessarily be reflected in changes immediately.
13:54We will see these changes perhaps in Q3 or Q4 this year. And once the year ends, we'll be able
13:59to look back at that data and see exactly at which point it is in the market transition.
14:03But market players are already transitioning towards electrified vehicles quite significantly.
14:07Toyota Malaysia has launched an entire line-up of electrified vehicles from top to bottom.
14:11We've also seen electric models from them. Brands like GWM are seeing enormous growth within their hybrid spaces, and they've
14:19also introduced more hybrid vehicles.
14:21And so I think that they're responding to a market that wants to maximise the litre, not necessarily transition to
14:26electric.
14:26So hybridisation more than that.
14:28Hybrid more than anything.
14:29But let's say if subsidy rationalisation does actually accelerate, do we risk a sort of a scenario of, let's say,
14:35a cost squeeze in the coming quarters,
14:38where petrol becomes more costly, dearer to us in Malaysia, before EVs become truly accessible?
14:45And do you feel, put in that spot, consumers might actually then take that lifestyle shift which it takes for
14:53true EV adoption?
14:54I think that if petrol prices were to, say, if they were to float them tomorrow, then perhaps EVs will
15:00suddenly become a little bit more attractive to people.
15:02Because ultimately, if you're charging it at a home tariff, you're talking about 57 cents per kilowatt hour, which is
15:06relatively affordable to power your car for a week.
15:08However, the primary issue that we have is that the majority of consumers live within urban areas, and within urbanites,
15:16most of us live in stratified properties,
15:17either condominiums or gated communities where there might be a joint management board that would restrict the ability to install
15:24a charger, in fact.
15:26So because of that, the inability or the friction that comes with not being able to charge at home will
15:31still act as a barrier for adoption,
15:34because ultimately the most convenient way to own an EV is to be able to go home and plug your
15:37car and wake up the next morning if you've got a full battery.
15:40But if you can't do that, then it makes life more difficult. It slows that transition towards fully electrified mobility.
15:48However, the bigger concern that I have is that if we were to move to that wholesale, if petrol suddenly
15:53becomes RM4.50 tomorrow and everybody starts buying an electric vehicle,
15:56at the moment, while the grid can handle it, the charging infrastructure cannot.
16:00So while there are certain media outlets who may report that there are no queues at chargers, the reality is
16:05very different.
16:06In the last couple of weeks, in my testing with several electric vehicles, I've encountered issues where either chargers are
16:11broken or they are oversubscribed,
16:13where there are people waiting and queuing for access to chargers.
16:17So there's demand and now the supply is sort of reaching that capacity.
16:21Correct. So right now, the onus is on charge point operators to install more charge points within urban areas,
16:27especially in order to allow those of us who have no option to charge at home the ability to charge
16:31outside.
16:33And that is going to be a significant challenge because that's a very cost intensive exercise.
16:37But it is something that we need to do if we are genuine in our interest towards moving to zero
16:41emissions mobility.
16:42And let's say another factor that that reminds me of is what about a very specific, not exactly a subsidy,
16:52but a sort of an offset for electric electricity charges for those who are opting to charge at home.
16:58Could that be something that we need to be seriously looking at too?
17:01That would be an interesting model.
17:03However, I think that in order to do that, you need a sub meter connected directly to the charger,
17:09which would then mean that there is a potential of that being tampered with.
17:12Leasons are very crafty.
17:14And so there is a possibility that some of these things might end up being tampered with and misused and
17:18abused.
17:19So what the government has done and together with TNB is already offered off peak rates.
17:24So now they already offer time of use rates instead.
17:27And so because most EVs allow you to schedule charging,
17:30you can charge your vehicle when the rates are slightly more attractive for you as a consumer.
17:34And so I do think that that's potentially enough for us to do right now.
17:38But that could be an option worth exploring later once they've figured out how to plug those gaps
17:42and ensure that particularly industrious individuals don't find a way to utilize that slightly more affordable electricity for a kettle.
17:50Fair enough.
17:51So let's move into looking at localization and ambition.
17:56But we're also seeing strong EV momentum from players like Pronat.
18:00But at the same time, localization levels are still fairly uneven.
18:03So what does it realistically take for Malaysia to be able to move from assembly to genuine manufacturing depth?
18:11So this brings us back to the EV tax holiday when we were trying to get as many imported EVs
18:17onto our market as humanly possible.
18:18That exercise ultimately was to gauge in real time what the interest is around electric vehicles, electric mobility in our
18:25market.
18:26And I think that that exercise has been relatively successful up until this point.
18:30It's allowed players to understand better what the appetite is for electrified and electric mobility in our market.
18:36Now, speaking specifically about Pronat, I think that when you talk about Proton eMust,
18:40they are now Malaysia's number one EV brand, despite only selling two electric vehicles and one plug-in hybrid,
18:46which is a significant milestone for them.
18:48However, within that, at the moment, we're now watching them transition from a fully imported model to a locally assembled
18:54model.
18:54And once the volume picks up, and you mentioned things like local assembly and local manufacturing,
18:59ultimately it is a matter of manufacturing volume.
19:02If you have the numbers there, then you can justify vendors and outside suppliers in order to set up shop
19:06here.
19:07So Perodoa, for example, with their QV, although sales may not necessarily be as exciting or as robust as they
19:13might like,
19:14they have been in in-depth talks with certain suppliers that may be able to set up their facilities here
19:19in order to feed that demand.
19:20They are still Malaysia's largest automaker, representing about 40, 30 to 40 percent of the overall market share,
19:28which means that when Perodoa says they need something, vendors are more likely to move quickly.
19:32And so if beyond the QV, since they've said they can use that platform for other models,
19:36if they manage to introduce more affordable electric or electrified models,
19:40increasing the demand for batteries and that sort of technology here in Malaysia,
19:44then we'll be able to push that needle and have better manufacturing and more higher end,
19:48more sophisticated manufacturing set up shop here, not just for the local market, but also for export within the region.
19:54Truly enough. And before we run out of time, moving quickly into looking at the logistics sector,
20:00in particular energy costability, too.
20:03So Malaysia has relatively stable power costs and grid reliability.
20:07How significant is that going to be as a competitive advantage in attracting EV and automotive investments,
20:13in particular for the logistics sector, when that is, of course, what's going to cascade costs and cost of living
20:20for us.
20:20And we're already going to feel it within the next two weeks.
20:23Indeed. I think that when you talk about logistics, the logistics sector specifically,
20:27electrified mobility within this space is a bit more challenging,
20:30especially given the fact that our terrain, our geography is also quite challenging.
20:34We have a lot of hills. We're not very diverse.
20:35So because of that, whenever you have to haul a very heavy load, especially going uphill and so on,
20:41they are very inefficient when it comes to electric mobility,
20:43which means that now, for example, certain logistics players like Swift Logistics
20:47already have a fleet of electric Volvo trucks, but those are mostly used for inter-urban movements,
20:52which is better because you're removing a lot of that emissions from our roads,
20:56from populated urban centres,
20:57and also means that when they're queuing up at ports, for example,
21:00in order to receive payloads and receive cargo,
21:03they're also not wasting diesel just sitting there idling
21:05because you can't switch them on and off like you would a passenger car.
21:08And so because of that, I think that within the logistics sector,
21:11as we move further down, players like Post Malaysia and DHL already have electrified fleets
21:15and they're already seeing the benefits, the cost benefits that come with this,
21:18as well as the uptime benefits because these vehicles don't break down,
21:21they don't require as much maintenance and upkeep as an internal combustion vehicle would.
21:27And so I think that now that there is more real-world, tangible data for players to look at,
21:32to chew on, it's allowing more players, it's getting them to look more towards electrified mobility
21:36in order to electrify their fleets and so on.
21:39But that's a very interesting and a pertinent point as well,
21:42the fact that the efficiency for EV or electrified logistics vehicles doesn't quite meet the requirements.
21:49Right. So mobility beyond vehicles.
21:52Let's move into one last area, which is, of course, it was quite the hot topic of discussion
21:56with the recent congestion debates in Kuala Lumpur, which still do continue.
22:02There was the Bangun KL initiative that was announced.
22:06Some thoughts on that.
22:07Are we being too focused on electrifying cars without addressing how Malaysians are moving
22:14and the mobility-related structural and systemic issues?
22:17Right. So, I mean, I am a car person, which means that as far as I'm concerned,
22:21more cars are always a good thing, more products, new products, etc.
22:24But the reality is that our infrastructure in Malaysia is currently oversubscribed.
22:29We, as you mentioned earlier, as you brought up earlier, we sell between 700,000 to 800,000 cars a
22:33year,
22:33despite the fact that we are a relatively small country with a relatively small population
22:37compared to some of our ASEAN neighbours.
22:38And so, with that in mind, initiatives like Bangun KL was well-intentioned
22:44because, in theory, if we could stagger 10% to 15% of road users every day to just move
22:51that a little bit,
22:53it would have a significant knock-on impact on everybody else.
22:57However, perhaps Malaysians have been relatively cynical, a bit snide with regards to this
23:01because we are in a pressure cooker of sorts.
23:04We're being squeezed on all sides.
23:05Our cost of living is going up.
23:06Our cost per kilometre for travel is going up.
23:09Our public transport infrastructure is also not necessarily as robust
23:12or as well thought out as we'd like.
23:15Ultimately, it is a solid initiative in the sense that it doesn't take away anything from government revenue.
23:19This is not something that's being funded by the government,
23:20and so there's no harm in such an initiative.
23:24But at the moment, in terms of policy, in terms of what the government needs to move towards
23:28and look towards, ultimately making public transport a bit more accessible,
23:32addressing last mile connectivity in a more meaningful way
23:34and not relying on individual operators like e-hailing or e-mobility solutions would be a better way to make
23:40this work.
23:40Because ultimately, I do think that more Malaysians would be more open to public transport
23:44if it was faster and more cost-efficient than it would be than driving a car.
23:48But at the moment, I believe it's something like 77% of Malaysians reliant on cars,
23:52which is significantly higher than the global average,
23:55there is not going to be a fast enough solution to address the congestion issues that we want.
24:01But every small initiative counts,
24:02which means that perhaps we need to be a little bit less cynical about this
24:06and accept the fact that this is a good thing as it comes.
24:08Whether or not it works for you doesn't matter, but if it does, it's great.
24:11And if it doesn't, it doesn't.
24:13And generally, of course, maybe six months from now,
24:15we'll see whether it does have actual tangible impacts.
24:19And speaking about the mobility-related issues,
24:22perhaps more community mobility solutions,
24:24such as focusing on vans rather than buses,
24:27which are on demand as well, such as the Rapid KL model,
24:30which has been recently introduced.
24:31Indeed. It's been very helpful. It's been very useful.
24:33And of course, because they're vans, they can go further than buses do.
24:36They can go into slightly more tighter-knit communities than a bus normally would.
24:40And so there is certainly much to be said.
24:42There's a lot more development that we could look at there.
24:43And so I certainly hope to see initiatives like that continue
24:46and continue to be affordable for more people.
24:48Thank you. Thanks very much, Ayman, for the insights today.
24:50Fantastic. So with oil prices under pressure globally,
24:53Malaysia doesn't really have the luxury of staying on the same path.
24:56The big question now isn't just how many cars we've been selling,
24:59but whether this shift actually builds value here at home.
25:02Well, that's all we have time for today.
25:04I'm Tamina Kausji signing off for now.
25:06We'll see you again next week with more economic analysis
25:08and highlights on Niagara Spotlight.
25:10Here's to a productive week ahead.
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