The year 2025 will be remembered by Malaysian car owners and consumers as the year when the government removes blanket subsidies for RON95 petrol. This means higher fuel prices, which will impact our daily expenses and potentially increase the cost of living due to rising energy and transport costs. However, a recent report by MIDF Research suggests that this change could alsoencourage more people to switch to electric vehicles (EVs). The report highlights the proposed T15 income bracket criteria for RON95 fuel subsidies, which is expected to be finalized by mid-year. According to Bernama, this policy change may push buyers towards more fuel-efficient cars or even EVs, especially before the current tax exemptions for fully imported (CBU) EVs expire at the end of the year. At the same time, the automotive industry will face a revised excise duty structure starting in January 2026. This adjustment will affect completely knocked-down (CKD) components, potentially increasing CKD vehicle prices by 10% to 30%. This is bad news for consumers looking for affordable cars. Meanwhile, private sector economists have suggested a two-tier pricing system for RON95 petrol as an alternative to the direct cash assistance already implemented for unsubsidized diesel. However, some argue that setting fuel prices based on vehicle type may not prevent wealthier individuals from benefiting from subsidies by using cheaper cars. This policy shift is expected to reshape consumer behavior and the automotive market in Malaysia. With rising fuel costs, many may reconsider their vehicle choices, potentially accelerating the adoption of fuel-efficient models and EVs. At the same time, debates continue over the most effective way to structure fuel subsidies, with concerns about fairness and practicality. As the government finalizes the details of the subsidy mechanism, both consumers and industry players will be closely watching how these changes impact costs and market trends in the months ahead.
Indonesia