MARC Ratings has affirmed its AIS rating on Tan Chong Motor Holdings Berhad’s (TCMH) RM1.5 billion Islamic Medium-Term Notes (Sukuk Murabahah) Programme. The rating outlook remains negative.
TCMH’s business performance remained weak, as vehicle sales decreased and domestic market share declined to about 0.8% as of end-September 2025 (2024: 1%; 2020–2023 average: 2.3%), mainly due to falling Nissan sales amid limited new models. To diversify its portfolio, TCMH was appointed super dealer for China-based Guangzhou Automobile Group Co, Ltd (GAC) vehicles in Malaysia, with principal-level responsibilities held by Warisan TC Holdings Group. Recent GAC launches of GAC GS3 Emzoom and AION Y Plus have been well received, with 734 units sold (RM77.9 million) following their launch in 4Q2024 and a backlog of 139 units valued at RM21.7 million as of end-October 2025. In May 2025, TCMH also partnered with Chinese automaker SAIC-GM-Wuling Automobile Co Ltd (SAIC-GM) to introduce TQ-Wuling-branded electric vehicles (EV), launching its first model, Bingo, in December 2025 with deliveries starting in 2026. Priced below RM100K, the model is positioned to capture growing EV demand. Overall, partnerships with GAC and SAIC-GM have broadened TCMH’s product line-up.
On 13 November 2025, TCMH’s 70%-owned subsidiary Tan Chong Motor Assemblies Sdn Bhd signed a Letter of Intent with Perodua Sales Sdn Bhd to provide electro-deposition coating and painting services and lease select EV assembly lines, with a formal agreement expected to be finalised by 1Q2026. The rating agency views this deal and TCMH’s ongoing diversification positively, as they help utilise under-used assembly capacity, which has been weakened by subdued Nissan sales, and support fixed-cost coverage. TCMH appears to be on a path towards operational improvement, though earnings benefit remains modest at this stage. The company’s capital structure remains stable (debt-to-equity ratio: 0.54x), and liquidity is adequate but declining (cash of RM284.1 million as of end-September 2025, down from >RM500 million pre-2024). Financial flexibility is expected to be preserved through conservative measures, including asset sales and restrained dividends. These factors support the current rating as the company executes its plans. A downgrade could occur in 6–12 months if operational performance stagnates and free cash flow remains deeply negative, placing further strain on liquidity.
TCMH primarily assembles and manufactures Nissan vehicles and provides contract assembly for other marques. In 1H2025, its domestic passenger-vehicle sales fell 5.6% y-o-y to 4,429 units, pressured by intense competition from lower-priced national brands Perodua and Proton as well as new Chinese entrants. Since 2021, revenue has generally declined — except for a rebound in 2022 — as falling sales and decreased market share widened pre-tax loss. Early gains from diversification include GAC-model sales increasing to 734 units by October 2025 from 233 units in 1H2025. The Perodua arrangement will further optimise plant capacity and cover fixed costs. Coupled with tighter inventory and procurement controls as well as more aggressive marketing, these measures are expected to improve business prospects and profitability. Total revenue grew 3.2% y-o-y to RM1.6 billion in 9M2025.
Overseas sales remained modest but improved, particularly in Myanmar and Vietnam, rising to 144 and 489 vehicles in 1H2025 from 28 and 151 in 1H2024. Overall revenue from Indochina in 9M2025 increased to RM166.7 million from RM88.2 million a year earlier, narrowing the segment loss to RM12.1 million from RM35.8 million.
Total borrowings declined to RM1.3 billion as of end-9M2025 from RM1.7 billion as at end-2024, including a RM200 million IMTN repayment in March 2025. The outstanding under the IMTN programme stood at RM310 million, with RM150 million maturing on 19 June 2026, which the group plans to meet using internal cash — including RM148.8 million from the proposed sale of a 3.2-acre land parcel at Jalan Putra, Kuala Lumpur, to Avaland Berhad — and existing banking lines.