The Automotive Industry: Proton, Perodua and the National Car Policy

Few countries the size of Malaysia have ever tried to build a car from scratch. Fewer still have two homegrown brands parked in most of the nation’s driveways. Drive through any Malaysian town and the traffic tells a story of deliberate industrial policy: a Perodua Myvi at the lights, a Proton Saga behind it, both descended from a 1980s bet that a developing economy could manufacture its own automobiles.

That bet defined Malaysian industry for four decades. Today it is being rewritten — by Chinese capital, by a wave of consolidation among the local giants, and by the shift to electric vehicles that is upending the whole global industry. Here is how the national car project became the market you see now.

Why did Malaysia build its own car in the first place?

In the early 1980s, Malaysia was an exporter of tin, rubber and palm oil looking to industrialise. The idea of a “Made in Malaysia” car was championed by then-Prime Minister Mahathir Mohamad as a vehicle — literally and figuratively — for heavy industry, engineering skills and national pride.

The company that resulted, Perusahaan Otomobil Nasional (Proton), was incorporated on 7 May 1983. It did not design a car from a blank sheet. Instead it partnered with Mitsubishi Motors, which supplied design support and critical technologies, and on 9 July 1985 the first Proton Saga rolled off the production line, powered by a Mitsubishi engine.

The Saga was an immediate national symbol. Protected by high import and excise duties on foreign cars, it quickly dominated the affordable end of the market. For years, buying a Proton was not just cheaper — the tax structure made most alternatives dramatically more expensive.

A decade later the government wanted a second brand focused on the smallest, most affordable cars. Perusahaan Otomobil Kedua (Perodua) — literally “Second National Car Company” — was established in 1993 (its first factory was opened on 1 August 1993) and started operations in 1994, this time in partnership with Japan’s Daihatsu. Its first model, the tiny Kancil, was launched on 29 August 1994 and became the archetypal Malaysian first car.

The two brands were built on different logics. Proton aimed to be a full-range, engineering-led national champion, eventually developing its own platforms and buying Britain’s Lotus in 1996. Perodua stayed narrowly focused on small, reliable, Daihatsu-derived cars built to a price — and, over time, that discipline made it the more commercially successful of the two.

Who owns Proton today?

Proton spent the 2000s and early 2010s struggling. Quality problems, thin export success and the slow erosion of tariff protection under trade liberalisation left it losing money and market share. In 2012 the conglomerate DRB-HICOM bought Proton. By the mid-2010s it was clear Proton needed a deep-pocketed technology partner to survive.

That partner was China’s Zhejiang Geely Holding (ZGH) — the group that also owns Volvo Cars. Under a definitive agreement signed on 23 June 2017 and completed in September 2017, Geely acquired a 49.9% equity stake in Proton, with DRB-HICOM retaining the majority balance. In the same transaction, Geely took a 51% controlling stake in Lotus, with Etika Automotive holding the remaining 49%.

The deal reshaped Proton’s engineering. It gained access to Geely’s products, platforms and technologies; Proton’s Tanjung Malim plant was designated a manufacturing hub for Geely’s right-hand-drive models. The turnaround showed up in the showroom: the Proton X70 SUV, a rebadged Geely Boyue, launched in 2018 and revived the brand’s fortunes, followed by the X50 and other Geely-based models.

So the honest answer to “is Proton still a national car?” is yes and no. It keeps its name, its heritage and Malaysian majority ownership through DRB-HICOM — but its cars are now built on Chinese engineering, and nearly half the company belongs to Geely.

	Proton	Perodua
Founded	1983	1993 (operations 1994)
First model	Saga (1985)	Kancil (1994)
Original technology partner	Mitsubishi Motors	Daihatsu
Current foreign partner	Geely (49.9%)	Daihatsu (technology)
Malaysian control	DRB-HICOM (majority)	UMW / Sime Darby, MBM, PNB
Positioning	Full-range, engineering-led	Small, affordable cars

Who owns Perodua?

Perodua’s structure is more diffuse. It has always been a joint venture between Malaysian corporates and its Japanese technology partner, with no single dominant owner. Its largest shareholder is UMW, which holds a 38% stake; the other shareholders include MBM Resources, Daihatsu Motor (the technology partner), Perbadanan Nasional Berhad (PNB) and Japan’s Mitsui. The precise minority percentages are not confirmed by an authoritative public source and should be verified before being relied upon.

Daihatsu supplies the platforms and much of the engineering; the popular Myvi, Bezza, Axia and Ativa are all Daihatsu-derived. But Perodua deliberately built local manufacturing, vendor and R&D capacity, and its cars carry high local content.

The most important recent change happened one level up. UMW Holdings, Perodua’s biggest shareholder, was itself acquired by Sime Darby. Sime Darby completed the purchase of a 61.18% stake in UMW for RM3.574 billion on 13 December 2023, then mopped up the remaining shares through a mandatory general offer in 2024. Because UMW also holds 51% of UMW Toyota Motor, the takeover folded both Perodua and Toyota into Sime Darby’s portfolio — which already included BMW, Ford, Hyundai, Porsche and others — creating Malaysia’s largest automotive group.

The upshot: Perodua is still run as an independent national marque, but its ownership tree now runs up through Sime Darby, a Malaysian blue-chip conglomerate.

How big are the national brands in the market?

Dominant. In 2024, Malaysia set a record with 816,747 vehicles sold (total industry volume), up 2.1% on 2023. Of that, passenger cars were 747,180 units and commercial vehicles 69,567.

Within that record market, Proton and Perodua sold a combined 505,689 units — roughly 62% of total industry volume and 67.7% of all passenger vehicles. In other words, two out of every three new cars bought in Malaysia are a national brand. Perodua is consistently the single best-selling marque; Proton typically ranks second or third.

This dominance is not purely a matter of quality or taste. It is the legacy of decades of tariff and excise policy that made national cars structurally cheaper, combined with genuine strengths — dense service networks, low running costs and strong resale value — that the brands have since earned.

What does the National Automotive Policy actually do?

Malaysia does not leave the car industry to the market. Through the Ministry of Investment, Trade and Industry (MITI), it periodically issues a National Automotive Policy (NAP) that sets the sector’s direction — from investment incentives to the kinds of vehicles the country wants to build.

The policy has evolved through several editions (2006, 2009, 2014 and 2020). The earlier NAPs leaned on protection for national cars; over time the emphasis shifted toward competitiveness, exports and cleaner vehicles. The NAP 2014 set the goal of making Malaysia a regional Energy-Efficient Vehicle (EEV) hub.

The current NAP 2020, launched in February 2020, reframes the ambition around three new focus areas:

1. Next Generation Vehicles (NxGV) — energy-efficient vehicles equipped with higher levels of automation, with Malaysia positioned as a regional development hub.
2. Mobility as a Service (MaaS) — expanding domestic participation in ride-hailing, connected and shared-mobility services.
3. Industry 4.0 (IR4.0) — smart, digital manufacturing across the automotive value chain.

MIDA describes NAP 2020 as a guiding policy to coordinate government and private-sector efforts to transform Malaysia into a regional centre for automotive R&D, manufacturing and sustainable-development technologies. Notably, the published policy is more directional than numerical — a point some analysts criticised at launch, since it set broad thrusts rather than hard, dated targets.

For context on scale, Malaysia produced 571,632 motor vehicles in 2019 (534,115 passenger and 37,517 commercial), according to MIDA — the industrial base NAP 2020 is meant to grow and modernise.

How is the shift to electric vehicles changing things?

Slowly, then suddenly. For years EVs were a rounding error in Malaysian sales. The government’s response was tax incentives to encourage both EV adoption and local assembly:

• Fully-imported (CBU) EVs were exempted from import and excise duty until 31 December 2025, under the timeline set in Budget 2023.
• Locally-assembled (CKD) EVs received excise-duty and sales-tax exemptions until 31 December 2027 — a deliberate nudge toward building EVs in Malaysia rather than importing them.

Budget 2026 did not extend the CBU incentive: the Ministry of Finance’s Fiscal Outlook 2026 confirmed the removal of the excise-duty exemption on completely built-up EVs from 2026. As a result, the CBU exemption lapsed on 1 January 2026 — imported EVs now face roughly 30% import duty (FTA-dependent), 10% excise duty and 10% sales tax — while the CKD exemption remains in force until 31 December 2027.

The incentives, plus a flood of competitively priced Chinese models, moved the needle. In 2024, electrified vehicles (xEVs) reached 5.6% of the market (up from 4.8% in 2023) — 45,562 units, comprising 14,766 battery EVs and 30,796 hybrids, with total electrified-vehicle sales up about 19% year-on-year.

The most symbolically important moves came from the national brands themselves:

• Proton e.MAS 7 — launched on 16 December 2024 by Prime Minister Anwar Ibrahim as “the company’s and the nation’s first electric vehicle.” A Geely-based SUV built on the Global Modular Architecture (GMA) platform, it is priced from RM109,800 (Prime) to RM123,800 (Premium), with a 345-410 km WLTP range and a 5-Star ASEAN NCAP rating.
• Perodua QV-E — launched on 1 December 2025, described by Perodua as Malaysia’s first homegrown battery EV. Priced at RM80,000 (excluding the battery), it was developed at a cost of RM800 million on an all-new platform, uses a 52.5 kWh lithium-iron-phosphate battery with up to 445 km of range, and introduces a “Battery-as-a-Service” model in which the car body is sold separately from the battery.

The two EVs capture the split personalities of the national brands. Proton’s is a rebadged, Geely-derived import brought to market fast. Perodua’s is a slower, more expensive but deliberately homegrown effort, positioned as an industrial-capability milestone rather than just a product.

How should a buyer or observer think about all this?

A simple decision frame:

• If you want the cheapest, most economical national car: Perodua remains the value benchmark — small, reliable, cheap to run, strong resale.
• If you want more car, more features and SUV styling for the money: Proton’s Geely-based X-series and sedans compete hard on equipment.
• If you want to go electric on a national-brand budget: the Perodua QV-E (from RM80,000, battery separate) undercuts the Proton e.MAS 7 (from RM109,800) — but check charging access, battery-subscription terms and real-world range before committing.
• If you are watching the industry: the story is consolidation (Sime Darby-UMW), foreign engineering (Geely in Proton, Daihatsu in Perodua) and a policy-driven EV pivot whose incentives are time-limited.

Common mistakes to avoid

• Assuming “national car” means fully Malaysian. Proton is 49.9% Geely-owned; Perodua’s technology is Daihatsu’s. National branding does not equal national engineering.
• Confusing Proton’s owner with Perodua’s. DRB-HICOM (with Geely) controls Proton; UMW/Sime Darby is the biggest Perodua shareholder. They are separate corporate families.
• Treating EV tax breaks as permanent. The CBU and CKD exemptions are time-limited and have repeatedly shifted; the on-the-road price of an EV depends heavily on which window you buy in.
• Reading NAP 2020 as a set of hard targets. It is a directional framework (NxGV, MaaS, IR4.0), not a table of guaranteed numbers.
• Ignoring the battery model. Perodua’s QV-E price excludes the battery, sold via a subscription — so the headline RM80,000 is not the full cost of ownership.

What’s next

Watch three things. First, EV incentives: the CBU import exemption already lapsed on 1 January 2026, and whether Malaysia extends or replaces the CKD tax break before it expires on 31 December 2027 will shape which EVs are affordable and where they are built. Second, local EV volume: Perodua’s plan to scale QV-E output from around 500 units a month toward 3,000 units a month by Q3 2026, and Proton’s move to assemble EVs locally, will test whether the national brands can make electrics at national-car prices. Third, consolidation and competition: with Sime Darby now sitting atop Perodua and Toyota, and Chinese brands pushing hard into the market, the comfortable two-thirds share the national brands have enjoyed is no longer guaranteed.

For the underlying figures, the primary sources are MITI and MIDA for policy, DRB-HICOM and the carmakers’ own announcements for ownership and product, and the Malaysian Automotive Association’s annual market review for sales — all linked below.