Car dealers have said there is a glut of 250,000 cars on the domestic market which could force many sellers to close down, a report said today.

The president of an association for dealers who sell cars by national automaker Proton, Ismail Din, said there were 800,000 cars for sale on the market, compared to the usual 500,000.

He said the excess cars included new and used models of every make.

"We believe this is caused by the credit tightening measures imposed by finance companies, the new National Automotive Policy and a slump in the car market industry," Ismail was quoted as saying in the Star daily.

"The situation is getting from bad to worse. By the end of this year, at least 40 percent of our 112 members will be forced to close shop as they are unable to make ends meet," he said.

Sales may pick up later

Car sales in Malaysia showed a slump in March over rising interest rates and fuel costs, and pricing uncertainties after the government announced its National Automotive Policy in February, which saw vehicle prices fall.

The policy comprised a string of measures, including tax cuts on imports, to help Malaysia achieve its goal of becoming a regional auto hub and making its lumbering national auto industry more competitive.

Economists have said sales may only pick up during the second half of the year after consumers digest the impact of the policy.

Proton's managing director Syed Hisham Syed Wazir said the company was considering suggestions to consolidate the two leading dealers for Proton cars to reduce sales competition.

"The other suggestion was to find ways to export reconditioned Proton cars to Third World countries and even this is still in the discussion stages," he was quoted as saying by the newspaper.