Malaysian auto sales to fall due to higher fuel prices: industry

Malaysia's vehicle sales are expected to dip 16.5 percent in the second half of the year due to higher fuel costs and rising inflation, the Malaysian Automotive Association said Wednesday.

The industry body said the bulk of the drop in auto sales will come from a 28 percent reduction in the volume of commercial vehicles sold, while sales of passenger vehicles are expected to slide by 0.5 percent.

"The slowdown will be mainly commercial vehicles and this is because of the fact that 54 percent of the commercial vehicles are pick-up trucks and these are fuel guzzlers," the association's president Aishah Ahmad told AFP.

"So we do anticipate that sales in this sector might be affected after fuel prices were raised," she told AFP.

Prime Minister Abdullah Ahmad Badawi announced a deeply unpopular 41 percent fuel price hike last month, which saw inflation surge to its highest level in 26 years in June to 7.7 percent.

For the first half of the year, new vehicle sales registered a robust 25.9 percent growth to 277,973 units from 220,739 units in the same period a year ago on steady economic growth and new models.

Aishah said the auto sector was on track to achieve its growth target of 4.7 percent to 510,000 units for the year despite the bleak outlook for the second half.

"We will maintain it despite the slowdown because of the fact that the industry has grown by 26 percent. Even with the expected slide, we are on track to achieve our target for the year," Aishah said.

Malaysia is Southeast Asia's largest market for passenger cars.

Aishah said the growth forecast for 2008 also factored in the increase in hire-purchase interest rates for non-national brands, stringent approvals for loans, a fall in consumer spending due to rising inflation and high oil prices.

Total vehicle sales for June rose 11.9 percent year-on-year to come in at 48,990 units with passenger vehicles accounting for 12 percent of total sales.
The association said sales for the month rose by 2.2 percent or 1,060 units from the previous month.

30/07/2008