Malaysia's vehicle sales rose 21.6 percent year-on-year in March to an all-time high of 50,558 and are likely to accelerate as consumers rush to buy in anticipation of higher car prices, reports said today.

The Malaysian Automotive Association (MAA) was quoted as saying by The Star that the strong sales were expected to be sustained through April given positive consumer confidence.

It attributed March's sales, which were up 37 percent from February, to consumers buying forward ahead of the implementation of a new vehicle duty structure in July which is expected to lead to an increase in car prices.

In March, sales of national passenger car brands grew 17.7 percent to 32,647 while non-national models rose 29.4 percent to 17,911.

For the first quarter of the year, the MAA said total vehicle sales grew 21.8 percent to 127,113. It has forecast motor vehicle sales this year to rise 2.5 percent to 500,000 from 487,605 last year.

Analysts said they expected buying to accelerate in the next two months in anticipation of higher prices in the second half of the year.

Malaysia, one of the region's top passenger car markets, cut import duties to 20 percent on cars made in the Association of Southeast Asian Nations (Asean) on Jan 1 as part of market liberalisation under the Asean Free Trade Area (Afta).

It also raised excise duties on all new cars sold in the country to offset an expected fall in revenue but the new tax structure has been put on hold amid complaints from some local auto firms that it provides little incentives for them to produce or assemble cars in the country.

Regional hub

The government is reviewing the policy amid fears it could undermine plans to make the country a regional auto production hub and is expected to finalise details in the next two months.

"Many are still in the dark as to whether there will be any government incentives under the new automotive policy to help offset the impact of the new tax structure," said a motor analyst with SBB Securities.

Another analyst said car prices were likely to increase regardless of the new policy because the current strength of the yen and euro would lead to higher production costs.

At the same time, the launch of new models, including by state-owned Proton which plans to unveil two new replacement vehicles this year, would help sustain demand, he said.