Malaysia's second auto manufacturer Perodua has cut its sales target for this year due to weak demand and rising competition ahead of the market's opening in two years, a report said today.

Although sales of Perusahaan Otomobil Kedua Sdn Bhd. (Perodua) cars outperformed the industry in the four months to April with 1.1 percent growth, this was below the company's expectations, managing director Abdul Rahman Omar told Bernama news agency.

Total vehicle sales in Malaysia's auto sector may range o­nly around 430,000-440,000 units this year, compared with some 434,000 units sold in 2002, he predicted.

Given the current weak market, he said Perodua aims to sell 132,000 to 135,000 units this year against its earlier forecast of 137,000-138,000.

Perodua, which produces a range of small and fuel-efficient models, sold 128,753 cars last year to control 30 percent of the local market. Its key shareholder is Japanese minicar maker Daihatsu Motor Co Ltd, which is a subsidiary of Toyota.

Abdul Rahman said Perodua, along with Malaysia's main carmaker Proton and other companies, were feeling the heat of rising competition ahead of market liberalisation under the Association of Southeast Asian Nations (Asean) Free Trade Area (Afta).

Hard times ahead

He noted an o­ngoing price war for mid-range cars sparked by Japanese giants Toyota and Honda which recently launched new competitive models.

"Proton, Nissan and Ford may have been affected. Sooner or later, it will affect us. This is the beginning, or maybe it's an adjustment with the coming of the Asean Free Trade Area (Afta)," he added.

Abdul Rahman said the two national carmakers will face hard times when competing with bigger, more established foreign manufacturers.

The combined production of Perodua and Proton, which stood at around 230,000 and 132,000 units respectively last year, was o­nly equivalent to a week of production for car giants like Toyota, General Motor and Fords which make six to eight million cars a year, he noted.

Foreign carmakers did not need to offer cheaper cars because even at the same price, "Malaysian buyers will probable switch their preference" and this is a worrying situation, he added.

Under Afta, tariffs for most products in the region were slashed to below five percent in January but Malaysia, the biggest car market in the region, has delayed opening its auto sector until 2005.

Major restructuring

Both Perodua and Proton, which has 60 percent of the local market, are scrambling to boost competitiveness ahead of Afta.

Proton o­n Tuesday unveiled a major restructuring that will allow it to expand its businesses and seek foreign alliances to gear up for open competition.

The auto sector is also awaiting the unveiling of new tariff structure under Afta as the government has said it planned to levy other charges to offset the loss of revenue in tariffs. - AFP