KUALA LUMPUR — The expanded targeted diesel subsidy scheme is expected to restore consumer confidence and stimulate demand for diesel-powered vehicles, following a sharp decline in purchases after last year’s subsidy rationalisation, according to the Malaysian Automotive Association (MAA).
The association said the removal of blanket diesel subsidies in June 2024 had significantly dampened demand, particularly for pick-up trucks and sport utility vehicles (SUVs) in Peninsular Malaysia, where sales have dropped by nearly 25 per cent.
“The targeted diesel subsidy is expected to encourage consumers to revisit their purchasing plans, especially in the pick-up truck segment, which has increasingly become a popular lifestyle vehicle, as well as diesel-powered SUVs,” MAA said in a statement reported by Free Malaysia Today.
The government has recently announced that subsidised diesel under the Budi Madani Diesel programme will be adjusted to RM2.10 per litre nationwide beginning in July.
Currently, diesel is priced at RM2.15 per litre under the subsidised rate in Sabah and Sarawak, while motorists in Peninsular Malaysia pay the market floating price of RM4.07 per litre.
MAA also welcomed the government’s decision to raise the subsidised diesel quota for eligible owners of pick-up trucks and SUVs by an additional 100 litres.
This increase comes on top of the existing 200-litre allocation under the programme, bringing the total eligible subsidised quota to 300 litres.
MAA president Shamsor Zain said the association appreciated government efforts to ease the burden on motorists affected by higher diesel prices, and urged Putrajaya to extend the additional allocation to diesel-powered multi-purpose vehicles (MPVs).
He said MPVs are commonly used by larger families for daily travel, adding that extending the subsidy would have minimal fiscal impact as diesel MPVs account for about one per cent of total industry volume.
Meanwhile, Second Finance Minister Datuk Seri Amir Hamzah Azizan previously said the enhanced Budi Madani Diesel programme is expected to reduce fuel leakage by up to one billion litres annually.
He said past abuse of diesel subsidies had largely stemmed from the absence of a nationwide MyKad verification system, unlike the mechanism already used for subsidised RON95 petrol.
According to Amir Hamzah, the MyKad-based system ensures that only eligible Malaysian citizens can purchase subsidised diesel, while non-citizens are required to pay prevailing market rates. – June 26, 2026