KUALA LUMPUR: Perusahaan Otomobil Kedua Sdn Bhd (Perodua), Malaysia's largest car company, is set to more than double its capital expenditure (capex) to RM1.6 billion in 2025, as part of its strategic reinvestment to enhance production capabilities and future growth.

The company's president and chief executive officer, Datuk Seri Zainal Abidin Ahmad said the RM1.6 billion capex represents a significant increase from the RM797.5 million allocated in 2024.

A major portion of the investment will be directed towards plant upgrades, expanding stamping capacity, developing new models, and acquiring advanced tooling, he said.

"These investments will consolidate manufacturing capacity, including at our vendors, level up service quality and productivity and solidify R&D product planning and new model development capabilities," Zainal said.

In 2024, Perodua surpassed its production capacity by manufacturing 368,100 vehicles, exceeding the combined 320,000-unit capacity of its plants in Rawang, Selangor.

"The 368,100-unit record was achieved by minimising downtime, keeping to the maintenance schedule, dynamic planning and coordination between our vendors and dealers and being agile in overcoming challenges," Zainal said.

He said 2025 will be Perodua's springboard for its future with emphasis on self-reliance in terms of production capabilities, especially in developing future products.

He added that Perodua is currently accelerating its people's capabilities to achieve greater self-reliance but this will result in lower production and sales this year.

However, Perodua expects production to dip by 4.9 per cent in 2025 to 350,000 units, with vehicle registrations projected to decline by 3.7 per cent to 345,000 units compared to 358,102 units last year.

"This reduction would see registration slowing by 3.7 per cent to 345,000 units from 358,102 units last year. Despite our planned slowdown in production and sales, demand for our vehicles remains healthy with current outstanding booking at 68,000 units, of which 28,000 bookings have letters of undertaking issued without stock," Zainal said.

On its after sales business, Zainal said Perodua is expected to further improve its intake volume this year to 3.7 million vehicles, up 7.6 per cent from the 3.4 million intakes recorded in 2024.

Perodua will continue to support the country's automotive ecosystem with an estimated local component purchase of RM10.8 billion from Malaysian vendors, he added.

In addition to auto component purchase, Perodua is working closely with the government to further enhance its vendors' and dealers' capabilities so that they can remain competitive.

This include further exploring Industry 4.0's potential in maximising efficiencies within their operations, conduct training and provide other assistance for sustainable growth.

"The year 2025 will be an exciting time for us as we prepare ourselves and our partners for the changes that are coming.

"We believe when these changes are completed, we would be able to further strengthen our current position in this country and this region," Zainal said.

KeyAuto senior editor Nicholas King said that despite strong demand, Perodua's decision to adopt a more measured approach to production and sales growth is unlikely to slow its momentum.

"In my view, Perodua's growth is all but certain, regardless of this new strategy. The key factor here is strong demand, even with a more modest sales and production outlook," he told Business Times.

He said the timing is ideal for Perodua to adopt a more flexible approach, as the company already has a solid foundation in the market.

"This strategy allows Perodua to balance multiple growth areas beyond just sales, including expansion and R&D, while also preparing for future market shifts," he said.

King also said that as long as Perodua maintains its competitive pricing and product offerings, it will remain a dominant player in Malaysia's automotive industry.

"Few brands come close to Perodua's sales figure with the exception of its partner Toyota in the region," he added.

While the impact of these investments may not be immediately visible, King believes this is a crucial preparation phase for Perodua to stay ahead of competitors.

He said this latest move positions Perodua to remain highly competitive in the long run, even if the benefits take time to materialise.