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Vehicle Sales Propelling Malaysian Economy
Jun 30, 2007

With a steady growth in the introduction of new vehicles, Malaysia is currently the leading Asian market in passenger cars’ sales, with low fuel prices and the easy availability of loans.

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Business Times reported figures released by the Malaysian Automotive Association (MAA) of a 13.8% or 4,648 units increase in the sales of vehicles in May 2007 in comparison to the previous month following new Viva model’s launch by Perodua.

The association expects sales volume in June 2007 to remain equivalent to May 2007. In its sales and production report, however, MAA noted a 14% decline in vehicle sales to 38,327 units as against 44,695 units in the same month last year (2006).

Talk of a Malaysian recovery has been stirring excitement around the traps. During the slowdown, Malaysia was able to outdo other competing economies in checking inflation and keeping costs down.

Malaysian car manufacturers are unceasingly coming out with economic models in the automotive market, resulting in growing number of cars on the roads. This in turn has fuelled demand for tires in the aftermarket. The aftermarket revenue has also started getting a boost from middle-income groups as well due to low fuel prices and easily available loans increasing affordability of Malaysian consumers for both used and new passenger cars.

Protectionist import tariffs hold sway over the car manufacturing market in Malaysia, which as always act as a double-edged sword. While they foster growth of a new developing industry without the ability to compete globally, they also cut down competition, which almost always results in sub-optimal products and services.

In the last decade, the growth in new vehicle registrations has reached an estimated 500,000 this year (2007) from an average of 200,000 annually in Malaysia. Fuelled by this powerful growth, Malaysia currently leads Asia as the largest passenger car market with annual vehicle sales exceeding 500,000, with 90% either manufactured or assembled locally.

RNCOS research analyst sums up the situation in higher sales expectations this year with automakers continuing to introduce new models, interest rates remaining low and no rise in vehicle prices. The surging growth of the economy has also brought better quality of life for Malaysians. The increase in per capita income continued along with the purchasing power parity.

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