Malaysia's car sale may hit record high in 2011

New car sale in Malaysia is expected to reach another historic high this year to 623,000 units, a business consultancy firm said Wednesday.

Frost & Sullivan said the Malaysian car market would be supported by stable economic outlook and new vehicle launches, with 16 vehicle models anticipated to enter the market this year.

The new sale record would be 4.1 percent higher than the estimated 598,200 units achieved in 2010, the firm added.

Frost & Sullivan partner and head of automotive and transportation practice for Asia Pacific Kavan Mukhtyar told a press conference here on Wednesday that higher fuel prices would not have dramatic impact because there was still a gap in public transports.

"People have to buy cars," said Kavan, adding that the impact of an interest rate hike would only be marginal.

Malaysia's central bank raised the overnight policy rate (OPR) by 75 basis points to 2.75 percent in 2010. It is expected that, under the normalization process, the OPR will be increased to 3.25 percent by end of 2011.

According to the firm, the sale of mid-size sedans is likely to increase by 6.9 percent year-on-year to 234,183 units this year, making up the largest chunk or 37.6 percent of total vehicle unit sale in the country.

However, the sale of multi-purpose vehicles (MPV) is expected to take a breather with an estimated 5.5 percent decline this year after a remarkable growth of 68.2 percent last year that accounted for one-fifth of the automotive market volume.

Strong sale of MPVs in 2010 was fuelled by the new models introduced by the national car makers Proton and Perodua at affordable prices.

Kavan said that the firm's analysis indicated that some of the customers owning small and compact cars had moved to the MPV segment.

In fact, the sale of small and compact cars in 2010 dropped by 15.3 percent in 2010.

Hybrid car sale in 2011 is likely to more than double to 3,400 units as compared to the estimated 1,500 units in 2010 due to excise duty exemptions on hybrid cars until the end of 2011.