Car Industry To Grow By 4.5 Per Cent This Year, Says Frost & Sullivan

Car Industry To Grow By 4.5 Per Cent This Year, Says Frost & Sullivan

KUALA LUMPUR, Jan 14 (Bernama) -- Malaysia's motor vehicle total industry volume (TIV) is expected to rebound strongly this year with a 4.5 per cent growth to a historic high of 555,000 units due to improved economic outlook and rising consumer sentiment, said Frost & Sullivan.

Its partner and head of the automotive and transportation practice for Asia Pacific, Kavan Mukhtyar, said the sales would also be driven by replacement car buyers amid low interest rates.

He said multi-purpose vehicles (MPVs) would be the fastest growth segment, increasing by 12.7 per cent year-on-year in 2010 to 68,000 units due to the intense competition among Proton Exora and Perodua Alza.

"Passenger cars will be the slowest growth segment at 3.2 per cent year-on-year due to lack of mass market models as well as some passenger car customers opting for entry-level MPVs.

"However, it will remain the biggest contributor to Malaysia's total vehicle sales accounting for about 75.3 per cent," he said at a media briefing here on Thursday.

Mukhtyar said demand for commercial vehicles was expected to increase five per cent year-on-year to 52,345 units, while 4x4 sports utility vehicles were likely to grow by 7.9 per cent year-on-year to 11,210 units.

He said in case interest rates rose substantially there could be a direct impact on vehicle sales.

"The other downside factors are global economic uncertainties, lower external demand and the impact of new fuel subsidy," he said.

Mukhtyar said there would be continued interest and development in electric vehicles and hybrids by car makers but demand was expected to be negligible this year.

"If the price of hybrid is almost equal to a regular car than the take-up could be high, but right now it is not possible.

"The market for hybrid cars will be substantial when the price difference is less than 10 per cent," he said.

He expected vehicle sales for 2009 to fall by 3.1 per cent compared with 2008 at 531,000 units versus an earlier forecast of 501,500 units.

"The better-than-expected TIV for 2009 was due to the government's stimulus package, scrapping incentive scheme for Proton and Perodua and continued strong sales of Perodua's Myvi, Viva and Proton Saga," he said.

Mukhtyar said the voluntary scrapping incentive has softened the downtrend in vehicle sales in 2009 as about 31,000 new vehicles were sold due to the incentive.

Although the scrapping incentives had ended, he said, the government may put such permanent "end-of-life" policy for vehicles amid commitments to reduce emission and use more environmentally-friendly products.

"It may not happen in 2010, but over the next five years such a policy will be put in place and consumers will be encouraged either directly or via higher taxes to replace their older vehicles," he said.

Last year, he said, Proton managed to increase its market share by 1.9 per cent due to sales from Exora in the MPV segment.

Perodua, however, continued to maintain its pole position in 2009 as Malaysia's leading carmaker with an estimated 33.4 per cent with Proton following closely behind at 30.4 per cent, he said.

"It will be an interesting competition between Alza and Exora as in terms of pricing and features both are equally attractive," he said, when asked whether Perodua would continue to hold its position as the market share leader.

He said both Proton and Perodua's market shares could be at par in 2010.

Mukhtyar said in the non-national car segment, Toyota's market share was likely to decline by four per cent to 13.6 per cent in 2009 due to intense competition in the MPV and entry-level mid-sized passenger car segment.

Meanwhile, Honda's market share grew by 1.6 percentage points to 8.1 per cent due to the new Honda City launch, he said.

-- BERNAMA