CAR INDUSTRY TO GROW BY 4.5 PCT 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 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 carmakers 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 ehicles 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 environmently-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, Malaysia's national car maker, managed to
increase its market share by 1.9 per cent due to sales from Exora in the MPV
segment.

Perodua, Malaysia's second largest car maker, 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


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