Strong vehicle sales recorded in Malaysia in 2004

Strong vehicle sales recorded in Malaysia in 2004

The Malaysian Automotive Association stated today that country's new motor vehicle sales rose by 20.2% to an all-time high in 2004; however the growth rate may slow down dramatically to 2.5% this year because of higher prices. In 2004, 487'605 units of vehicles were sold in Malaysia. The sharp increase grew out from new car models, low interest rates and easy financing models. However this year, the growth in sales is expected to slow down due to the appreciation of the Yen and Euro against the Ringgit, which is pegged to the US Dollar at MYR 3.80. Analysts believe that slower sales growth will reduce profit margins as higher production costs and rising competition impacted auto distributors negatively. Another factor which may ease car sales is slowing economic growth. According to the statement made by the government, GDP (Gross Domestic Product) will regress in 2005 to around 6% from an estimated 7% in 2004. On the other hand, analysts, who believe that the association's forecast is pessimistic, expect vehicle sales to reach 526'000 units in 2005. This forecast is based on expectations the government will in June announce new tax rebates on investments in assembly plants and provide other incentives such as grants for research and development that could keep prices steady.