Auto sector to remain vibrant despite decline

KUALA LUMPUR: Frost & Sullivan remains optimistic on the Malaysian automotive sector despite predicting a 2.9 per cent year-on-year (y-o-y) decline in 2013 vehicle sales to 600,000 units.

Kavan Mukhtyar, partner and head of the Automotive and Transportation Practice, Asia Pacific said the predicted decline was due to the overall uncertainty over the impending general election and the possible announcement of the revised National Automotive Policy (NAP).

“The overall uncertainty surrounding the general elections and the NAP are likely to restrain fresh demand as well as the significant replacement market,” he told a media briefing on the industry outlook yesterday.

The total industry volume (TIV) last year amounted to 618,000, the highest ever vehicle sales for Malaysia, with 60 per cent of the market share held by national carmakers Proton (26.3 per cent) and Perodua (34.1 per cent).

Mukhtyar said key factors likely to impact the demand this year included reduction in taxes and constant interest rates.

“If there were any incremental reduction in duties or taxes, we do not see it altering the market too dramatically.

Malaysia’s economy is expected to be stable as there are no major changes in the interest rate,” he said.

He expected the country’s interest rate to hover at the current level of three per cent this year but said any increase in fuel prices and electricity tariffs, coupled with the continued stricter loan approvals, would impact negatively on the demand.

Mukhtyar noted that sales of passenger vehicles would likely shed 4.7 per cent y-o-y this year to 518,000 units, as some consumers hold back on purchases of big-ticket items due to the uncertainties.

Meanwhile, the commercial vehicles segment was expected to remain on the growth path this year, boosted by strong performance in the construction as well as the oil and gas industries.

The segment was projected to grow 9.9 per cent y-o-y to 82,000 units this year.

Mukhtyar said hybrid vehicles would see high growth, registering a two-fold increase to 35,000 units in 2013 compared with 2012, but would account for three per cent of total volume. — Bernama

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