'New vehicle sales to slow down this year'

KUALA LUMPUR: Business consulting firm Frost & Sullivan expects a 2.9 per cent drop to about 600,000 units in new vehicle sales this year.

The firm, however, is bullish on the local sector over the medium term, expecting a robust growth of at least five per cent in the next five to seven years.

Its partner and head of automotive and transportation service Kavan Mukhtyar said the overall uncertainty due to the general election and possible announcement of the revised national automotive policy (NAP) are likely to restrain demand in 2013.

"Automakers are likely to adopt a cautious approach in launching new models until the revised NAP is announced, most likely after March," he said at a briefing on the Malaysian automotive outlook here yesterday.

He said the tightening of hire purchase rules and stricter loan approvals are also likely to have a negative impact on entry level vehicles.

Mukhtyar said this year, sales of passenger vehicles will likely fall 4.7 per cent year-on-year to 518,000 units. Commercial vehicles segment is expected to stay on the growth path driven by strong performance in the construction.

He added that sales for the A-segment will continue to shrink at 15 per cent year-on-year to 50,000 units due to limited models offered and stricter credit control.

"The A-segment will continue to shrink as new entry level customers jump to B-segment offerings, which is a global phenomenon," he said.

He noted that that with duty exemption for hybrid vehicles extended until the year end of 2013, new models in the pipeline and growing customer acceptance, hybrid vehicle sales are expected to nearly double as compared to last year.

Frost & Sullivan predicts hybrid vehicle sales to reach 35,000 units in 2013 from an expected 18,000 units in 2012.

On the position of national carmaker Proton in 2013, Mukhtyar said with growing acceptance and interest in hybrid car, Proton is "under pressure and there is tremendous need for it to drive its sales of existing models to retain its market share."

Last year, Proton, he noted, lost 3 per cent market share despite the launch of the Preve, while Perodua bounced back with the second generation MyVi.

He said with the imminent Asean liberalisation of the automotive sector, local carmakers must intensify their efforts to export and not merely meet local consumer needs.

"A good example is Thailand where half of its car production is for export and that should be the way for Malaysia too," he said.

Last year, both Proton and Perodua commanded 60 per cent of the Malaysian automotive market with the latter a leader in passenger vehicle market with 34.1 per cent and the former a 26.3 per cent share.

Mukhtyar said the NAP must meet two priorities, namely the need to attract investment into the Malaysian automotive space and making the existing supply chain of companies already investing here more competitive.