KUALA LUMPUR: The implementation of e-invoicing has had a limited impact on car sales as automakers step up efforts to provide discounts and rebates to sustain demand and alleviate consumer concerns, said Kenanga Investment Bank Bhd today.

In a research note today, the bank explained that e-invoicing which aims to improve transparency in financial transactions, effectively halts the widespread practice of offering 100 per cent hire purchase financing.

Under the Hire Purchase Act 1967, customers are required to pay a minimum 10 per cent down payment for vehicle purchases.

Meanwhile, Kenanga Investment highlighted that the recent strengthening of the ringgit against the US dollar is expected to reduce the automotive parts costs starting in the second half of 2025 as well as improve margins, as automakers typically procure inventory six months ahead of production to ensure supply sustainability.

The bank noted that the local automotive market is showing signs of a dual-speed trajectory, a trend the bank expects to persist through 2025.

"It will be business as usual for the affordable segment, which targets groups such as the B40, the impact of the impending fuel subsidy rationalisation will be minimal. Additionally, this group could benefit from the introduction of the progressive wage model," it said.

Kenanga Investment also pointed out that civil servants' pay hikes in December 2024 would help partially restore their purchasing power, eroded by inflation.

However, the mid-market segment, targeting the M40 group, may face challenges as these customers may delay purchasing new vehicles, opt for smaller cars, or switch to electric vehicles (EVs) to manage fuel costs post-fuel subsidy rationalisation, it said.

The bank highlighted the growing adoption of battery electric vehicles (BEVs), supported by incentives such as sales and service tax (SST) exemptions and EV facility benefits valid until 2025 for fully built units and 2027 for locally assembled units.

It said the new registration for BEVs leapt from 274 units in 2021 to over 3,400 units in 2022, 10,159 units in 2023, and almost 16,000 units for nine months of 2024 (based on the Ministry of Transport press release), or 3.0 per cent of total industry value (TIV).

BEV registrations surged from 274 units in 2021 to over 3,400 units in 2022, 10,159 units in 2023, and almost 16,000 units in the first nine months of 2024, representing three per cent of the total industry volume (TIV), it said, citing Ministry of Transport data.

Kenanga Investment expects the government to introduce more incentives, targeting a national goal for EVs and hybrids to constitute 15 per cent of TIV by 2030 and 38 per cent by 2040.

The bank also emphasised the government's efforts to accelerate the approval process for EV charging stations.

Currently, 4,225 stations have been proposed, with 3,354 already operational and this figure is projected to nearly triple to 10,000 by the end of 2025, it added.