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Malaysian Auto Sales to Slowdown
Feb 18, 2009

Global financial crisis will hit automotive sales this year in Malaysia as people become more careful about their purchases and auto industry is suffering from higher raw material cost.

The Malaysian Automotive Association has predicted that automobile sales in the country will go down in 2009, although it performed above expectations by growing 12.5% in 2008. The negative sales projection for 2009 is primarily based on the global economic slump, as reported by International Herald Tribune.

Automobile sales in Malaysia, the largest passenger car market in Southeast Asia, touched 548,115 Units in 2008 the second highest sales after 2005. The sales figure surpassed the group’s projection of 510,000 Units. Passenger car sales increased 12.3% to 497,459 Units and sales of commercial vehicles witnessed a growth of 14.4% to 50,656 Units in 2008. However, it is expected that automotive sales will drop 12.4% to 480,000 Units in 2009.

The rapid development in the automobile sales in 2008 was driven by strong economic growth and launch of cheaper cars along with aggressive marketing by manufacturing companies that prompted people to invest in the industry. Moreover, high margins of financing, low interest rates and longer repayment periods also played critical role in boosting automotive sales during 2008.

However, the global economic slowdown will end the party season for auto manufacturers in 2009. People are refraining themselves from making hefty purchases as their confidence level is very low. Besides, appreciation in the Malaysian currency against Yen and other currencies has added to the auto companies’ worry of higher manufacturing cost because import of raw material has become more expensive. Shipping and transportation charges have also surged which will affect the sales.

Auto companies recently raised the commercial vehicle prices, including trucks, to offset higher cost. It is expected that passenger car manufacturers will soon join their commercial vehicle counterparts.

In spite of low projections for 2009, no member of the Malaysian Automotive Association has shown signs of layoff as there are still orders pending from 2008. In addition, launch of new models will help the industry by sustaining consumer interest.

According to a Research Analyst at RNCOS, “The demand for small engine capacity cars is expected to increase this year as consumers will shift their inclination to cheaper and more fuel efficient cars amidst economic slowdown. The launch of new models will also keep people’s interest alive in automobiles.”

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