The Malaysian Automotive Association (MAA) said the three percent rise would take the industry to its highest recorded sales of 410,000 vehicles.
"Only a modest sales growth will be achieved. But if the US economy expands and Japan shows signs of recovery, it will boost local consumer confidence and spur motor sales in Malaysia," MAA president Aishah Ahmad told AFP.
Sales growth should top the three percent level if Malaysia's economic growth is higher than the four percent assumed by MAA, she said.
In January Prime Minister Dr Mahathir Mohamad forecast 3.0 percent growth for the Malaysian economy - down from an earlier official forecast of 4.0-5.0 percent growth.
Aishah said the September terror attacks in the US had an impact on motor sales for that month but they recovered in October and the total for the year was the highest among the 10-member Association of Southeast Asian Nations.
Earlier she told reporters that the forecast of three percent was based on the fact that fewer new models are expected to be launched this year, unlike last year's introduction of a large number of new models.
Aishah the industry was optimistic about growth in 2002 because of low interest rates and down payments and the easy availability of hire purchase financing, along with a RM1 billion car financing package for teachers.
Aishah said strong demand for the Waja model launched by national carmaker Proton was expected to lead car sales this year.
Local cars accounted for 93 percent of last year's increased sales.
Proton led with an unchanged market share of 63 percent while Perodua maintained its market share of 29 percent.
Non-national car sales last year rose to 24,225 from 20,659 in 2000, led by Toyota, Nissan and Ford.