RON95 petrol subsidy rationalisation, EV adoption promotion expected at Budget 2025 tabling – CIMB

More details on the implementation of RON 95 petrol subsidy rationalisation are expected to be revealed during the tabling of Budget 2025 on October 18, according to CIMB Securities Research. This echoes what was mentioned by RHB Investment Bank just a few days ago.

In addition to RON 95 petrol subsidy rationalisation, CIMB Securities Research also expects the government to continue promoting electric vehicle (EV) adoption, The Star reports. Both initiatives are said to have an effect on vehicles sales moving forward into 2025.

The research house anticipates total industry volume (TIV) in the fourth quarter of 2024 to be “softer” due to the government’s plan to rationalise fuel subsidies. However, it noted that the introduction of the Employees’ Provident Fund (EPF) Account 3 and salary hikes for civil servants could bolster new vehicle sales.

RON95 petrol subsidy rationalisation, EV adoption promotion expected at Budget 2025 tabling – CIMB

While the Malaysian Automotive Association (MAA) anticipates TIV for 2024 to be 765,000 units (revised from 740,000 units), the research house is cautious and expects the figure to be at 751,000 units. It cited the absence of sales tax exemptions, potential higher RON 95 costs and increased competition from premium EVs and Chinese original equipment manufacturers as key factors.

The anticipated fuel subsidy rationalisation could also add inflationary pressure to further dampen consumer sentiment. The removal of the diesel subsidy on June 10 this year has resulted in weaker commercial vehicle sales, with the MAA revising its forecast from 74,000 units to 68,850 units.

Additionally, the tightening liquidity in the financial sector, which has seen in a dip in hire purchase loan approval rates to 58.1% in the first seven months of 2024, may also impact demand. On the matter of EV adoption, the research house said it expects the government to continue offering tax reliefs and rebates to individuals and investments in new EV infrastructure.

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