Japanese automaker Honda today said it has raised its sales target in Malaysia this year to 18,000 units, up by half from the earlier 12,000 forecast, driven by strong demand for new models and competitive pricing.

But Honda officials ruled out any sharp reduction in car prices when Malaysia liberalises its auto market in 2005 under the Association of Southeast Asian Nations (Asean) Free Trade Area (Afta).

Honda Malaysia managing director Seiki Kuraishi said the sales target was raised following strong demand for its new 'City' model, which received some 10,000 bookings since it was launched in April despite a five-month wait.

He said the recent Severe Acute Respiratory Syndrome (Sars) outbreak in the region has had no impact on sales, which were expected to be further boosted by Wednesday's launch of an improved 'Civic' version and another model to be introduced at the year-end.

Improved features

Honda has already doubled production at its new factory in Melaka to 80 cars a day to meet demand, he said.

"Due to the successful launch of the City, we have revised our target to 18,000 this year which is triple our sales of some 6,000 cars last year. It will be driven by our new factory, new models and competitive pricing," he told reporters.

Kuraishi said the company expected to sell 4,000 units of the improved Civic in a year, with the car competitively priced at around RM110,000 to challenge the Toyota Altis and Nissan Sentra models.

The new Civic, which has already been launched in Thailand, the Philippines and Singapore, offers improved features from the current 1.7 liter model but retails at about eight percent cheaper than the existing model, officials said.

Kuraishi said Honda cars currently used more than 70 percent Asean contents, and savings from that allowed the company to produce more affordable models.

He said he did not expect foreign carmakers to cut prices and sacrifice profit to boost market share under Afta, and noted that the government has announced it would impose domestic duties to offset the loss of revenue in tariffs.

"Car prices can still come down because there is still a gap but there will not be very much change. It will be very, very small, maybe less than five percent," he added.

Stiff competition

Foreign car sales in Malaysia, the biggest passenger car market in the region, has increased by 19 percent in the first half this year at the expense of nationally-built cars, Proton and Perodua, which are feeling the heat ahead of market liberalisation.

Industry observers said foreign carmakers were able to gain market share because of the introduction of new models and the lifting of price controls by the government in January which led to very competitive prices.

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