SMOOTHER RIDE FOR AUTO INDUSTRY IN 2010

By Mohd Iswandi Kasan Anuar

KUALA LUMPUR, Dec 31 (Bernama) -- The local automotive industry is expected
to see a smooth racetrack ahead in 2010, reversing this year's slowdown that
resulted from the global economic turmoil.

The vroom factors include better economic growth, new model launches, strong
consumer confidence, improving access to financing and a more favourable pricing
environment.

The Malaysian economy is expected to grow between four and five per cent in
2010, barring unforeseen circumstances.

"Based on the encouraging sales figure in November, car sales are set to
continue gaining momentum in the new year," Malaysian Automotive Association
president Aishah Ahmad told Bernama.

In November, 2009, total vehicle sales were 45,200 units, up 11 per cent
from 40,865 units in the same month last year as market conditions improved.

Aishah said the revised National Automotive Policy (NAP) was expected to
give the industry a boost as the policy would ensure a long-term viability and
competitiveness of the automotive industry.

However, the industry might take some time to warm up before shifting to an
upper gear, she said.

OSK Research motor analyst Ahmad Maghfur Usman said the NAP could transform
the local automotive industry into a regional hub over the longer term with
giveaways such as corporate tax holidays and tax exemption on exported goods to
lure global original equipment manufacturers (OEMs).

"While the incentives will benefit the industry overall, we see Proton as a
clear winner given that ample capacity at its Shah Alam plant can potentially be
taken up by global OEMs," he said.

He said the government was trying to attract European carmakers following
the recent relaxation on equity conditions for manufacturers in the luxury
passenger car segment.

"This fortifies our view that a partnership between Proton and Volkswagen is
bound to materialise anytime soon," Ahmad Maghfur said.

"We are optimistic of the longer term prospects of the industry going
forward," he said, adding that total industry volume (TIV) would grow by 3.7 per
cent next year from 500,000 units projected in 2009.

On the downside, the key risks were lack of new models to lift TIV and
higher financing cost due to the likelihood of a hike in the overnight policy
rate (OPR) next year, he added.

Bank Negara Malaysia (Malaysia's Central Bank) has decided to leave the OPR
unchanged at two per cent at its last Monetary Policy Committee meeting for
2009, last month.

On new models, Proton for instance will be launching new Waja and Perdana
next year, in addition to a facelift Persona.

Proton Holdings Bhd recorded a 77 per cent increase in its pre-tax profit to
RM100.652 million for the second quarter ended Sept 30, 2009 compared with
RM56.608 million in the same quarter last year.

With revenue rising to RM2.104 billion from RM1.846 billion previously, the
national carmaker attributed the improved results to better overall margins
following the introduction of its multi-purpose vehicle, the Exora.

Proton was also reported to be optimistic about increasing its market share
to 29 per cent in the financial year ending March 31, 2010 from 26 per cent in
2009.

Second national carmaker Perusahaan Otomobil Kedua Sdn Bhd (Perodua) also
expects to increase its market share to 33.3 per cent next year from 31.1 per
cent presently, counting on its latest MPV, the Alza.

Perodua Alza, the smallish seven-seater, with a price tag of between
RM55,000 and RM70,000, is the among the latest local models unveiled this year.
Others include the Naza Forte.

Market watchers are of the view that automotive companies should strengthen
their advertising and promotions as well as sales teams to win the minds and
hearts of buyers both in the city or rural areas.

Those with the swift gear will step on the accelerator to win the race while
those who blink and press the brakes, will lose out. (US$1=RM3.42)
-- BERNAMA