Vehicle sales continued to sink in February, falling 4.8 percent as the downturn saw finance institutions adopt tough loan approval standards, an industry group said today.

global warming malaysia motorcars cars smoke emission The Malaysian Automotive Association said that continued "low consumer confidence" amid the global economic crisis and "stringent evaluation on applications for hire purchase loans" were hurting sales.

Auto sales in Southeast Asia's biggest passenger car market contracted 4.8 percent year-on-year in February to 36,675 from 38,527.

Sales volume in February was 1,126 units or 3.0 percent lower than the previous month, it said. Vehicle sales plunged 17.5 percent year-on-year in January as consumer confidence nosedived.

But the association said sales in March would pick up due to "slightly improved consumer confidence" and a "longer working month."

The association in January predicted that Malaysia's vehicle sales would fall 12.4 percent in 2009 due to a slowing economy and poor consumer sentiment amid the global economic slump.

The industry group forecast sales at 480,000 units for 2009, down from 548,115 last year.

Malaysia recently said that its economy could contract by 1.0 percent in 2009 despite a massive RM60 billion stimulus package, dumping its earlier target of 3.5 percent growth.

Inflation eases to 3.7%

Meanwhile, the inflation rate eased to 3.7 percent year-on-year in February from 3.9 percent a month earlier as demand falls in the slowing economy.

The Department of Statistics said the consumer price index for January to February had risen by 0.2 percent.

"The fall in inflation is expected due to slower growth," Wan Suhaimi Saidi, an economist with Kenanga Investment Bank, told AFP .

"Going forward, inflation will slow down due to falling consumer demand and this gives room for the central bank to further cut interest rate," he added.

Inflation jumped to a 26-year high in August at 8.5 percent, driven up by the high cost of food and fuel following a 41-percent fuel price hike.

Malaysia's central bank cut its key interest rate by 50 basis points to 2.0 percent last month, saying the troubled global outlook had raised the risk of a recession in 2009.

The surprise decision represented an unprecedented third consecutive cut in interest rates, as Malaysia attempts to stave off a slowdown with official data showing steep declines in exports and industrial production.

The central bank had said that with inflation on a moderating trend, the main task was to support domestic demand until the global economy shows signs of recovery.