In light of the weak ringgit, rising cost of living, tightened lending guidelines and other factors, the Malaysian Automotive Association forecasts the Total Industry Volume (TIV) to suffer a year-on-year drop of 2.5 percent this year.

In announcing the "Market Review for 2015 and outlook for 2016", association president Aishah Ahmad said the forecast for TIV in 2016 will be 650,000 unit sales.

This is in contrast to the 666,674 units sold in 2015, or a predicted drop in the sales of 16,674 units this year.

As for Proton, the national car saw a dip in both sales and market share, but Perodua was in the opposite situation.

In 2014, Proton's sales and market share were 115,783 units and 17.4 percent respectively, while Perodua saw 195,579 units sold, accounting for 29.3 percent of the market share.

However, in 2015, Proton's sales units and market share declined to 102,175 and 15.3 percent, a fall of 2.1 percent, while Perodua saw sales go up to 213,307 units that made up 32 percent of the market share, or an increase of 2.7 percent.

However, Aishah said, automobile dealers would not “go under with the slowdown” this year.

"It is based on the resilience of the dealers. I don’t think that all will be closing shop. It depends on their financial situation.

"I think the distributors will also ensure that the dealers are able to survive, because without the dealers, you cannot sell. So it’s a chicken and egg situation," she said.

'Banks should loosen up on loans'

In coping with the gloomy future, Aishah said, banks should not tighten up on hire-purchase loans as his would increase the difficulty of customers in buying cars.

"It's very difficult to get hire-purchase loans. The rejection rate could be as high as 30 to 50 percent, depending on the credit worthiness of the customer.

"As for as the loan amount, one will not be able to get a 90 percent loan now. It’s more likely to be 65 to 70 percent, which means the buyer will have to come up with a bigger downpayment.

"The repayment period is also shortened to about seven years, not like the nine years before. These are the factors that are going to impact sales," Aishah said.

The International Trade and Industry has said Malaysians can look forward to a drop in car prices in the next two years, after the Trans-Pacific Partnership Agreement (TPPA) is signed.

However, Aishah begs to differ.

"The TIV will remain. It will not affect the TIV in Malaysia. If you are asking me if car prices will be coming down, I say 'No'.

"This is because the car industry in Malaysia is not sourcing from TPPA countries," she explained. "Look at us, it's from Europe, Korea, Japan, Thailand, Asean and all that. So, it doesn't affect us. it will still be the same."

Original Equipment Manufacturer (OEM) players in Malaysia can hardly benefit under the TPPA as they are not allowed to export out due to restrictions, she said.

Aishah added that with the current foreign exchange rate, car prices are expected to hike.

"It’s inevitable. Once the existing stocks deplete, then you have to increase prices. There’s no way you can hold on to existing prices when your margins are eroded.

"It’s either market share or profits. How long can one go with market share, without having any profit?"

Currently, the exchange rate stands at RM4.38 to US$1.