Malaysia overtakes Indonesia as ASEAN’s leading car market, Thailand shows recovery amid Japanese exit

WEDNESDAY, AUGUST 06, 2025

Malaysia surpasses Indonesia in ASEAN car sales, with Thailand showing signs of recovery, but Japanese brands continue to withdraw from the market.

The ASEAN car market has entered a new era as Malaysia overtakes Indonesia to become the leading car market in the region for the first time. This milestone comes as Vietnam accelerates efforts to surpass the Philippines, positioning itself as the fourth-largest market in ASEAN. While Thailand shows signs of recovery, Japanese car manufacturers continue to gradually withdraw from the region.

In the second quarter of this year, ASEAN car sales indicated a key shift, with Malaysia surpassing Indonesia, despite Indonesia's larger population of 280 million, compared to Malaysia’s 34 million. This change reflects a growing trend in ASEAN car markets, as Thailand’s sales were reported at 707,055 units, a slight decline of 1% compared to the previous year, according to data from Nikkei Asia. The trend signals a new dynamic in the region’s automotive market.

Malaysia overtakes Indonesia as ASEAN’s leading car market, Thailand shows recovery amid Japanese exit


Malaysia’s National Brands Drive Market Growth

Despite economic uncertainties across ASEAN, Malaysia’s domestic car brands—Perodua and Proton—continue to lead the market, making up 63% of sales in the first half of the year. Popular models like the Perodua Alza and Proton Saga dominated the top-selling spots, alongside international brands like Toyota Vios and Honda City.

Daihatsu, a subsidiary of Toyota, and Geely, which holds a 49.9% stake in Proton, have supported these local manufacturers, with both Perodua and Proton regarded as national car producers receiving indirect government backing for their role in national development.

The rise in popularity of electric vehicles (EVs) and hybrid cars has also boosted Malaysia’s car market, with EV sales increasing by 91% year-on-year, totalling 12,733 units, while hybrid car sales grew 12%, reaching 17,480 units in the first half of 2025.

Malaysia overtakes Indonesia as ASEAN’s leading car market, Thailand shows recovery amid Japanese exit


Indonesia Faces Economic Pressure

For Indonesia, despite its large population, it is currently experiencing economic pressure, especially in the automotive sector. Car sales in June dropped by 21%, a significant decline for the first time since March 2024, due to weakening purchasing power in the middle class and stricter consumer credit conditions. The sales slump in June led to a 12% decline in total sales for the second quarter.

Danamon Bank economists stated that the decline in sales is mainly due to the weakened purchasing power of the middle class and the tightened credit conditions for consumers. Furthermore, data from the Central Statistics Agency of Indonesia (BPS) revealed a significant contraction in the middle class, dropping from 21.4% of the population in 2019 to just 17.1% in 2024. This shift is impacting not only the automotive industry but also various sectors that rely heavily on middle-class consumers.


Vietnam on Track to Become ASEAN's 4th Largest Car Market

Vietnam is set to surpass the Philippines and become the 4th largest car market in ASEAN. In the second quarter of 2025, Vietnam’s car sales increased by 18%, reaching 90,772 units. Although this was below the previous four quarters’ consistent 20% growth, the figure still represents a high growth rate. Despite concerns from manufacturers regarding the tariffs imposed by the Trump administration, Vietnam’s exports to the US remain robust.

Vietnam’s GDP grew by 7.52% in the first half of 2025, the highest in 15 years, bolstered by a rising middle class, which is also supporting automobile sales. Notably, VinFast, the national electric vehicle (EV) manufacturer, sold 87,000 electric vehicles domestically in 2024. As a result, Vietnam’s car market could soon overtake the Philippines, making it the fourth-largest in the region.


Thailand Shows EV Recovery

In Thailand, the third-largest car market in ASEAN, car sales increased by 3.6% in the second quarter of 2025, reaching 149,501 units. This marks the first quarterly increase since Q3 2022, with a 1% increase in April, the first growth in nearly two years. The recovery has primarily been driven by the rising sales of electric vehicles.

According to the Electric Vehicle Association of Thailand (EVAT), total EV sales from January to June surged by 33%, amounting to 69,005 units, which represents 23% of total car sales in the same period, reaching 302,704 units.

However, several Japanese car manufacturers are reducing their operations in Thailand:

  • Honda plans to cease production at its Ayutthaya plant this year and consolidate production at its Prachinburi plant.
  • Suzuki Motor intends to close its Thai subsidiary’s car assembly plant by end-2025.
  • Nissan is restructuring its production in Thailand, merging domestic lines and shifting production from Argentina to Brazil, while preparing to close one of its two plants in Thailand, with an annual capacity of 220,000 units.

Meanwhile, the Federation of Thai Industries (FTI) announced last week that it has lowered its forecast for car production in 2025 from 1.5 million units to 1.45 million units, a 1% decrease from the previous year.