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Friday, July 28, 2006

Car sales to drop by 8% this year, says MAA

Passenger car sales is now expected to contract by 8% this year on the back of higher interest rates and fuel prices as well as falling used car prices, the trade body, Malaysian Automotive Association (MAA) said.

This is a sharp contrast to its earlier projection of at least 3% growth for car sales. The downward revision comes after a 7% decline in car sales in the first half of the year (1H06).

The decline was inspite of the unveiling of National Automotive Policy (NAP) earlier this year that had removed a lot of uncertainties, but was more than offset by the other factors.

MAA president, Datuk Aishah Ahmad, said ironically, the NAP partly contributed to the decline in sales when it led to reduction in prices for completely knocked down units, but triggered a drop in resale values.

She said rising interest rates, more stringent approvals on hire purchase loans and shorter repayment periods were the other contributing factors.

Speaking at a media briefing in Petaling Jaya on July 27, on the TIV data for 1H06, Aishah expects the downward trend to moderate in the second half but at best, sales would remain at the same level as last year. She expects growth next year.

"We think the second half will improve as used car prices will be accepted," she said, adding that rising interest rates would not pose too much of a problem unless there was a big hike.

Aishah said the MAA had spoken to the government on providing incentives in the form of a certificate for people to trade in used cars of a certain age for scrap, in exchange for newer used cars.

MAA expects TIV to contract by 6% (versus earlier forecast of 3% growth) to 520,000 units this year from 551,042 units in 2005. Car sales are expected to decline by 8% from 400,835 units last year to 368,000 this year.

Commercial vehicles and four-by-four vehicles are expected to register a growth of 1% each to 114,000 units and 38,000 units, respectively.

In 1H06, total industry volume (TIV), which includes commercial and four-by-four vehicles, fell 5% to 248, 407 units from 261,111 units in 1H05.

Car sales fell 7% to 184,725 units in 1H06 from 199,554 units, while 45,464 units of commercial vehicles were sold, up 4% from 43,657 units.

Four-by-four vehicle sales were registered at 18,218 units in 1H06, up 1.77% from the same period last year when 17,900 units were sold.

Passenger car sales represented a 74% share of the total motor vehicle industry during 1H06, while commercial vehicle sales accounted for 18%.

Aishah said other ASEAN countries had experienced a slowdown in TIV during the first half as a result of high oil prices.

Indonesia faced the biggest contraction of 49% while the Thailand and the Philippines experienced declines of 3.2% and 3% respectively.


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