TA Securities analyst Angeline Chin warned that weaker consumer sentiment and shrinking order backlogs are dragging down Malaysia’s auto sales and margins, according to recent earnings and monthly sales data. Intensifying rivalry from Chinese brands adds pressure, prompting the firm to keep its 2026 sales outlook at 750,000 units, an 8.6% year‑over‑year decline and profitability margins across the local supply chain.

Chin noted that new rules requiring fully imported electric vehicles could give a modest lift to domestic manufacturers, but she expects the effect on overall volumes to stay limited. Such a modest lift does not offset the broader market sales slump. The analyst therefore downgraded the Malaysian automotive sector to underweight from neutral, issuing sell recommendations on Bermaz Auto, MBM Resources and Sime Darby.

With margins squeezed and competition sharpening, investors face tighter earnings forecasts for the region’s carmakers. TA Securities’ downgrade signals heightened risk, and the sell ratings suggest near‑term price pressure on the highlighted stocks. Analysts also warn that any policy shifts on EV imports could further reshape competitive dynamics. Market participants should reassess exposure to Malaysia’s auto sector amid the lingering demand slowdown.