Provisional data estimates that Chinese car brands in Malaysia ended 2024 with a 4.3% market share, up from last year’s 1.4%. The Malaysian Automotive Association (MAA) will be announcing the finalized tally for 2024 new car sales in the country, which is estimated to number around 810,000.

Data published by JPJ, however, allows for some estimates to be made, but note that JPJ’s figures are not conclusive because they’re inflated by parallel-imported ‘recon’ units, and do not include heavy-duty commercial vehicles like trucks, prime movers, and panel vans. They do, however, include light commercial vehicles like pick-up trucks and window vans.

There are now 35 Chinese brands in Malaysia, about half of which are commercial vans and trucks you’ve never heard of, like Toyota Hiace copies (some are licensed copies, others are not) sold under weird names like King Long and Higer.

The Chinese brands aimed at private car customers number 15, including sub-brands. For example, GWM’s Haval, Ora, and Tank are counted as three separate brands, as are Jaecoo and Chery.

Out of the 15, Chery ranks at the top, with 12,646 units sold last year, followed by BYD’s 8,570 units, and Chery’s upscale brand Jaecoo, with 7,041 units.

GWM, another fast rising Chinese car, only launched its first mainstream model, the Haval H6, in October last year, so its impact will only be felt this year.

Nearly all Chinese brands have core models that focus on the B- and C-segment SUVs priced between RM 100,000 to RM 200,000, a space currently dominated by the Toyota Corolla Cross, Honda HR-V, Mazda CX-30, Proton X70, Honda CR-V, and Mazda CX-5.

Since Malaysia’s new car market is not growing fast enough to accommodate so many new entrants, the SUV segment has become a zero-sum game – China’s gain is Japan’s loss.

As for the battery EV (BEV) segment, BYD’s dominance gets a lot of attention, but in terms of sales volume, this segment accounts for less than 3% of total new car sales, so its impact on the bigger picture is still very limited.

The battlefield where Japan is defending against China is in regular combustion engine and hybrid B- and C-segment SUVs, which make up around 20% of Malaysia’s total new car sales. The real disruptor to Japan’s dominance is Chery (including Jaecoo), not BYD.

In 2023, Chinese brands had a market share of just 1.4%. In 2024, the figure more than tripled to 4.3%. With more models introduced by more brands this year, it's reasonable to expect Chinese brands to grow their market share to 5%, beyond which Chinese brands can no longer be considered as outliers.

Denza, Jetour, Changan, and Deepal are among the Chinese brands making their local debut this year. Locally assembled Neta, BAIC, and MG models will also join the competition.

2024 also saw the total market share of Japanese brands dropped from 31.7% to 28.4%.

If we were to adjust the figures to record Geely-sourced Proton models as Chinese, and Perodua as Japanese (Perodua’s output is included in Daihatsu’s global sales tally), the figures would change quite a bit.

The market share of Chinese brands (including Proton’s X series and S70 models) would’ve risen from 7.2% in 2023 to 10.9% in 2024.

Japanese brands, including Daihatsu-affiliated Perodua, would’ve declined slightly from 73.0% in 2023 to 72.6% in 2024.

High-end German brands are also seeing an erosion of market share, from 3.7% in 2023 to 2.8% in 2024, though not necessarily to Chinese brands, but due to an overall lack of interest in the models presented by BMW and Mercedes-Benz.

The Germans are losing market share because of their insistence on prioritizing the agenda of powertrain electrification ahead of customer requirements. Customers that don’t want a BEV or a plug-in hybrid now have fewer options.

Popular Mercedes-Benz models like the C300, E300, GLC 200, and GLC 300 have been discontinued, replaced by plug-in hybrid 350e variant equivalents. While Malaysians aspire to own German cars, they also have a high level of distrust toward non-Japanese hybrids, especially plug-in hybrids, with their much bigger (and more expensive) batteries.

A customer that walks into a Mercedes-Benz showroom today asking for a GLC will be informed that there is only the plug-in hybrid GLC 350e. If the customer doesn’t want a plug-in hybrid, the sales advisor can only offer a GLC 43 Coupe as an alternative.

Obviously, that’s a silly recommendation that doesn’t reflect an understanding of the customer’s needs – the first step in selling any product – but there’s really nothing else the sales advisor can say to retain the customer.

BMW Malaysia has a more balanced product portfolio, retaining the 330i and regular combustion engine variants of the X1 and X3, but the 5 Series is overly dependent on the fully electric i5.

For the combustion engine 5 Series, the entry 520i is the sole representative for 2024. The 530i was only announced this week, with only an estimated price.

The previous generation plug-in hybrid BMW X5 had a short burst of success, but it now trails behind the Lexus RX. The Lexus RX, excluding recon units, sells three times as much as an X5.

More than 60% of Lexus RX sales (officially imported ones by Lexus Malaysia) are contributed by the RX 500h variant, whose regular self-charging hybrid is winning over customers with its better reputation for reliability.

The MINI Countryman, the brand's most important model, typically contributing over 60% of MINI Malaysia's total sales, struggled for more than half a year as it was only available as a BEV. The combustion engine variant was only introduced in January 2025, and like the BMW 530i, there is still no confirmed price for the model.

There’s also Tesla’s effect. The Tesla Model 3 and Model Y sold around 5,100 units last year. That’s around 20% of Malaysia’s premium new car sales in 2024.

BMW Group Malaysia's own figures showed it sold 1,200 units less BMW cars in 2024, and 300 units less MINIs. Total car sales (excluding BMW Motorrad) for the group was down by 11.1%, to 11,900 units. BEV sales (including a small number of electric BMW motorcycles) are down 25%, to 2,700 units.

Mercedes-Benz Malaysia no longer announce its sales figures but the brand is experiencing similar challenges.

German brands are not only losing sales from a lack of suitable combustion engine models, but their BEVs are not selling as well as their makers had hoped, not just in Malaysia but across our region.

Several strategic missteps have resulted in German BEV models being reduced to appliances whose unique selling points are Internet connectivity, gimmicky touchscreens, and LED ambient lights with more colours than a rainbow. When the focus of a high-end car is centred around touchscreens, dancing lights, and software - things that anyone with a laptop and access to a cheap Korean or Chinese supplier can do - the uniqueness of a BMW's 'Joy' or a 'Best or Nothing' Mercedes-Benz rapidly diminishes.

In their quest to be more like the competition, the Germans have lost their identity and customers are reacting to it.

For 2025, Japanese brands in the mainstream segments will be forced to play defensively, and it will be very difficult for them to resist being drawn into a highly unproductive cycle of price wars, which not only destroys brand equity but also alienates customers.

As for the Germans, they urgently need a major realignment of product strategy to match customer demands—which really haven’t changed as much as the supposedly forward thinkers are predicting. Customers are still demanding models like the C300, GLC 300, 530i, and combustion engine Countryman.

Without such adjustments, they won't be able to hold their ground, at least not without resorting to more brand equity-destroying discounting and pre-registering BEVs that few want. To be clear, the BEV market will keep growing, but customers won't pay the prices that the Germans are asking, especially not for a car that doesn't feel significantly different from a much cheaper Chinese one.

On the bigger picture, the prospect of Malaysia descending down the same path as Thailand—repeating the same mistakes that could soon lead to a hollowing out of its manufacturing industries—is a very real threat.