Demand for electric vehicles (EVs) is contributing to changes in Southeast Asia's automotive market, influencing vehicle sales in Indonesia, Malaysia, Thailand and Vietnam.

Sales data for the April-to-June period from the region's major automotive markets showed that combined vehicle sales increased by about 11% year on year, supported by growth in Indonesia, Malaysia and Thailand.

Indonesia remained Southeast Asia's largest automotive market in the second quarter, with sales rising 34% year on year. Government incentives and increasing interest in Chinese EV and plug-in hybrid models contributed to the increase, despite intensifying competition among Chinese automakers seeking to expand their presence in the market.

Chinese brands have increased their market share. EV manufacturer BYD accounted for about 5.3% of Indonesia's overall vehicle market in the first half of the year, while Chery's Jaecoo represented approximately 4%, according to data from the Association of Indonesian Automotive Industries (Gaikindo).

Chinese manufacturers are also expanding their product portfolios beyond battery EVs. Companies including BYD and Chery have introduced plug-in hybrid models to attract consumers concerned about charging infrastructure and long-distance travel.

The expansion of Chinese brands and their broader product line-ups has generated mixed responses among consumers. Anastasia Putri Widjaja, a 33-year-old business owner in Jakarta, said BYD's M6 plug-in hybrid is currently her preferred choice for her next vehicle purchase because it combines practicality and affordability in a seven-seat multipurpose vehicle.

"It is ideal for long-distance travel, especially now that the price of non-subsidised fuel has increased," she told media sources.

Widjaja said she has few concerns about Chinese brands provided they offer reliable after-sales service, adding that Wuling remains an option because its quality has already been established in the market.

Other consumers remain more cautious. Andriawan Pratikto, a 30-year-old content creator from East Java, said he still prefers Japanese hybrid vehicles because of their extensive service networks and the availability of spare parts in smaller cities.

"If the car breaks down, can I be sure repair services will reach my town quickly?" he said, expressing concern about potential inconvenience. "When it is finally time to replace my car, Toyota, Daihatsu, Mitsubishi and Suzuki will still be my top choices."

The growing presence of Chinese brands comes as Indonesia reviews a new EV incentive programme. Industry Minister Agus Gumiwang Kartasasmita recently said the government would prioritise "national brands", although details of the policy have yet to be announced.

Malaysia recorded growth in the second quarter. Sales increased 9.7% year on year, prompting the Malaysian Automotive Association (MAA) to raise its full-year sales forecast from 790,000 to 800,000 vehicles. The market is undergoing two notable shifts: increasing demand for sport utility vehicles (SUVs) and increasing electrification. SUVs remained among Malaysia's most popular vehicle categories. Meanwhile, EV sales increased 106%, exceeding hybrid sales for the first time.

Combined EV and hybrid sales increased 69%, accounting for 13.4% of total vehicle sales, compared with 8.2% a year earlier. Proton's e.MAS line-up accounted for a significant share of the increase. The e.MAS 5 was Malaysia's best-selling EV during the first half, while the e.MAS 7 ranked second. The figures indicate that EV adoption is expanding beyond early adopters in a market where hybrids have traditionally been regarded as the more practical option.

Price appears to be an important factor. Roger Lee, a sales consultant at Proton's showroom in Petaling Jaya, said the e.MAS 5 accounted for about seven out of every 10 purchases and was particularly popular among younger urban buyers. Priced at approximately half the cost of the larger e.MAS 7, the model has expanded access to EV ownership at a time when imported electric vehicles remain significantly more expensive.

"Many customers want to own an EV, but imported brands are often two or even three times more expensive," Lee said.

Showroom demand also appears to be reflected in nationwide sales. Zhang Qiang, chief executive officer of Proton's EV subsidiary Pro-Net, said the e.MAS brand accounted for a 43% share of the country's EV market.

"We believe Malaysia is approaching a tipping point where EVs are becoming a mainstream consideration rather than a niche choice for early adopters," Zhang told media sources.

Thailand's automotive market recorded an increase of about 10% year on year in the second quarter, extending the country's run of consecutive quarterly gains to five. Industry officials attributed much of the increase to EV demand, which helped offset weaker sales of conventional vehicles.

The recovery, however, remains uneven. High household debt levels and strict vehicle loan approval requirements continue to affect consumer demand, particularly for pickup trucks, one of Thailand's largest vehicle segments. At the same time, EV adoption has increased, reflecting the growing presence of Chinese manufacturers in the market.

The industry's challenges extend beyond domestic sales. Vehicle production declined 1% year on year, while exports fell 8.3%, indicating pressure on Thailand's position as Southeast Asia's largest automotive manufacturing hub.

Yeap Swee Chuan, chief executive officer of Bangkok-based auto parts supplier and dealership Aapico Hitech, recently told media sources that the long-term challenge is not weak demand but adapting to the expansion of Chinese automakers, whose technological advances are reshaping supply chains and competitive dynamics across the region.

Vietnam presents a different picture. Sales reported by members of the Vietnam Automobile Manufacturers' Association (VAMA) increased 2% year on year during the second quarter. However, the market is considerably larger when sales from non-VAMA members VinFast and Hyundai Motor, which partners with the local Thang Cong Group conglomerate, are included, bringing Vietnam's effective vehicle market close to Thailand's despite its substantially lower rate of vehicle ownership.

Unlike most other Southeast Asian markets, Vietnam's transition to EVs is being driven primarily by a domestic manufacturer rather than foreign automakers. VinFast overtook Toyota Motor last year to become the country's largest automaker.

The company's expansion has been supported by a charging network operated by its affiliate V-Green, as well as consumer demand for a domestic brand. VinFast is also expanding into the mass market through lower-priced vehicles. Its recently unveiled VF2, priced at approximately US$ 7,100, is the company's lowest-priced model to date and is intended to broaden vehicle ownership among middle-income consumers.

The Philippines, meanwhile, continues to trail several other ASEAN member states. Vehicle sales declined 14% year on year in the second quarter, making it one of the region's weaker-performing markets. Nevertheless, the government is seeking to encourage domestic manufacturing through stronger EV demand.

On July 30th, President Ferdinand Marcos Jr. launched a US$ 1 billion incentive programme to support domestic EV production by offering co-funding for investments and production. The initiative follows policy measures introduced in Thailand, Indonesia and Vietnam to attract EV investment and develop local supply chains.

Singapore remained one of Southeast Asia's smaller automotive markets. However, electric vehicles accounted for around 62% of registrations, compared with approximately 40% a year earlier.

The city-state's transition towards EVs has attracted automakers from China, Europe and other regions. BYD has consistently ranked as Singapore's best-selling automotive brand, while luxury manufacturers are also expanding their electric vehicle offerings.

"Customers are highly informed," said Henrik Dreier, director of Singapore imports at Porsche Asia Pacific, during the launch of the new Cayenne Electric in July. "We believe the Cayenne Electric is perfectly suited to this market."

The differing experiences across Southeast Asia show that the region's transition to EVs is progressing through different approaches. Chinese brands have become more prominent in Indonesia and Thailand; Malaysia is approaching a stage where EV sales are beginning to exceed hybrid sales; Vietnam's market is being shaped largely by VinFast; and Singapore has a relatively high level of EV adoption.

As EV adoption continues to increase, governments are placing greater emphasis on manufacturing, supply chains and employment alongside vehicle sales. The government in Manila said its new programme is intended to "position the Philippines as a regional automotive manufacturing hub."