Malaysian vehicle sales in 2002 hit the highest level in five years but uncertainties due to the Asean Free Trade Area (Afta) are dampening demand as consumers expect better deals, a trade group said today.

Sales grew 9.7 percent to 434,954 units last year, making Malaysia the top market in the Association of Southeast Asian Nations for the sixth straight year, but it was likely to lose out to Thailand by 2007 or earlier, said the Malaysian Automotive Association (MAA).

MAA president Aishah Ahmad said the government's announcement last month that it would raise excise duties to offset tariff cuts under Afta has created uncertainties over future pricing structure.

December sales dropped nearly 10 percent year-on-year as many consumers waited for cheaper cars o­n news import tariffs of between 42 to 300 percent would be cut from this year to 20 percent by January 1, 2005 and down to five percent by 2008, she said.

"I don't expect it but the average layman o­n the street still think prices are going to come down.

"Even when we tell them that we don't think so, they don't believe us. So the faster the details of the policy are announced, it will be better for the industry," she told a news conference.

Uncertainties

The tariffs were originally supposed to be reduced this month under Afta but Malaysia has negotiated an extension until 2005 to give local automakers more time to prepare for tougher competition.

Prime Minister Dr Mahathir Mohamad has told Malaysians not to expect prices to fall under Afta as local taxes would be imposed o­n all cars to replace the loss of revenue from import tariffs.

The MAA said passenger car sales in 2002 rose 10 percent to 359,934 units, with national cars Proton and Perodua accounting for 91 percent and Japanese carmakers Toyota and Nissan topping the non-national segment.

Sales of commercial cars were up nearly 14 percent to 42,727 units while that of four-wheel-drive vehicles rose three percent to 32,293.

Aishah said the MAA, which represents 34 foreign car distributors in the country, expected details of the new tax system to be unveiled in the first quarter this year.

Uncertainties over Malaysia's policy o­n Afta, an impending Iraq war, a depressed stock market and lower resale value for used cars were likely to slow down sales this year, she said.

"MAA forecasts that the 2003 volume would grow by 3.5 percent to reach another highest recorded sales of 450,000 units in Malaysia," she said.

Malaysian sales were still the highest in Asean in 2002 but "Thailand will be the leading market by 2007 or earlier because the world manufacturers are there and they have a larger population," she added.

Dominant four

Malaysia enjoyed a 32 percent share in the Asean market last year. Along with Thailand, Indonesia and the Philippines, the four dominated 92 percent of the regional market.

Aishah said Malaysia's delay in opening its car market would see it losing out in exports to the Asean market, with sales likely to remain focused o­n domestic demand.

It would also affect plans by foreign car makers to produce specific models in different Asean countries for regional export, she said.

"Now because Malaysia's auto policy is not announced and the fact that our auto duties are still higher than other Asean countries, you don't expect vehicles from Malaysia at 20 percent (tariffs) in 2005 to be accepted by Thailand and the other countries at five percent," she said.

"Under AFTA, the rules should be the same for everybody. We hope to see a level playing field by 2008." - AFP