Five foreign automakers are keen to assemble and manufacture cars in Malaysia, Southeast Asia's largest passenger car market, a senior minister said today.

Trade minister Mustapa Mohamed said the government was reviewing applications from the European and Asian carmakers, adding that a decision would be made by year-end but did not elaborate.

He refused to name the firms.

"This is an important industry. I would like to see more investments," he told reporters after launching the first Chevrolet cars service centre run by Naza, which assembles Peugeot and Kia models in Malaysia.

"Hopefully, one day these (Chevrolet) cars can be manufactured here," Mustapa added. Currently, Chevrolet cars are imported from Thailand.

Auto sales in Malaysia are expected to hit new highs this year, with the Malaysian Automotive Association (MAA) in July revising its 2010 sales forecast up to 570,000 units, from earlier estimates of 550,000.

The MAA said it was optimistic the industry would break an record of 552,316 units sold in 2005.

The steady growth in car sales has already spurred French auto giant PSA Peugeot Citroen, Japan's Toyota and Volkswagen of Germany to move assembly of top-end cars to Malaysia.

Mustapa said the five foreign players are being encouraged to produce cars with engine capacity of 1800cc and above, using the under-utilised capacity of local makers.

"Malaysia has a capacity to produce one million cars per year but production is 500,000. The industry is only working at 50 percent capacity," he said.

- AFP