KUALA LUMPUR, April 24 — Banks approved the highest amount of car loans in December 2025, exceeding even levels seen during Covid lockdowns, when interest rates were low and manufacturers offered heavy discounts to sustain demand amid a global economic slowdown.

Data published on OpenDOSM, the website operated by the Department of Statistics Malaysia, showed lenders approved RM10.7 billion in hire purchases in December 2025 — roughly RM400 million more than the previous peak in March 2023, when the world was recovering from the Covid crisis.

This figure reflects hire purchases approved. In the same month, the total value of car loan applications surged to RM18 billion. Total hire purchases disbursed in January 2026 stood at RM6.2 billion, followed by just over RM4 billion the month after, the data showed.

Bank Negara Malaysia data showed car loans made up a staggering 13.9 per cent of Malaysia’s RM1.7 trillion household debt in 2025, or roughly RM113 billion.

Malaysia has the second-highest household debt-to-GDP ratio in South-east Asia, at between 80 and 85 per cent. The highest is Thailand.

Malaysia’s automotive industry reached a historic milestone in 2025, with a record 820,752 vehicles sold, marking the second consecutive year that total industry volume (TIV) surpassed the 800,000-unit mark.

The year ended with a surge in December, which saw an all-time monthly high of 90,716 units, as buyers rushed to beat the expiry of tax incentives for imported electric vehicles.

Still, economists said the volume of cars sold underpins a “deeply entrenched” reliance on private vehicle ownership.

Despite the government’s aggressive expansion of the Klang Valley LRT and MRT networks, data suggests that for most Malaysians the “last-mile” hurdle remains an insurmountable barrier that only four wheels can overcome.

Analysts said the surge is largely attributed to prolonged hesitation in fully implementing targeted petrol subsidies.

While the government has signalled a shift towards a tiered system for RON95, the delay has kept pump prices artificially low compared to regional neighbours, effectively subsidising the hire-purchase market.