Malaysia's vehicle sales in 2003 fell for the first time in five years as consumers held back amid uncertainties over auto policy but they are expected to rebound this year despite an impending hike in car prices, a trade group said today.

Sales fell 6.90 percent to 405,100 units last year because consumers were waiting for cheaper cars under the Association of Southeast Asian Nations (Asean) Free Trade Area (Afta) and due to the Sars outbreak in the region, the Malaysian Automotive Association (MAA) said.

MAA president Aishah Ahmad said Malaysia was the only country among Asean's top four auto markets - along with Thailand, Indonesia and the Philippines - that registered a drop in vehicle sales but it remained the biggest passenger car market.

Sales are expected to rebound to grow five percent to reach 425,000 units this year because uncertainties over Malaysia's Afat policy have been lifted following the recent announcement of a new motor tariff structure, she said.

Although car prices will generally increase under the new tax structure, she said a strong stockmarket, a robust economy, continued attractive hire purchase rates and impending general elections will boost sales.

"The auto industry can expect to perform better in 2004. The direction by the government is clear and vehicle prices are not expected to come down with the implementation of Afta in Malaysia," she told a news conference.

New prices

Members of the MAA, which represents 34 foreign car distributors, are expected to unveil new car prices within a month.

Passenger car sales in 2003 fell 11 percent to 319,845 units, with national cars Proton and Perodua accounting for 85 percent of the market, down from 91 percent in 2002, while non-national cars increased their share to 15 percent, led by Japanese carmakers Toyota and Nissan.

Proton car sales fell a sharp 27.5 percent to 155,420 units, causing its market share to slip to 49 percent from 60 percent in 2002.

Sales of commercial cars were up nearly 19 percent to 50,824 while four-wheel-drive vehicles rose six percent to 34,339.

Under Afta, import tariffs for most products in the region were cut to below five percent over the last year. Malaysia obtained a two-year reprieve for its auto industry until 2005 but it recently said it would further defer reducing duties to the required level until 2008. - AFP