The
automotive industry in Malaysia
performed better than expected with total sales of 396,381 units in 2001 from
343,173 units in the previous years. Spurred by low interest rates and the
introduction of new models, the industry grew by 16 per cent, which was double
the target of eight per cent. Proton dominated the market with 64 per cent of
total passenger car sales. Perodua came second with a 29 per cent market share.
In 2004, the Malaysian Automotive Association(MAA) is projecting vehicle sales
to grow by three per cent to 410,000 units. MAA is projecting passenger car
sales to grow by four per cent this year to 340,000 units, commercial vehicle
sales to expand by one per cent to 38,000 units and 4WD vehicle sales to rise
by two per cent to 32,000 units. It attributed the forecast to the expected
improvement in the Malaysian economy in the second half of 2003 as well as
bonuses and wage increases for civil servants. Furthermore, an additional RM1
billion car financing fund for teachers was given. Last but not least was the
industry players' aggressive promotion campaigns and attractive discounts.
There are 12 car
assemblers in the country, in addition to the two national car companies, Proton and Perodua. Both companies dominate the industry due to
government protection policies and together, they command 93 per cent share of
the total passenger car sector. However, they face significant challenges in
terms of competition, profitability and the impending effects of the ASEAN Free
Trade Area (AFTA). The domestic car
industry is expected to come under pressure due to the World
Trade Organization’s (WTO) efforts to reduce trade barriers and the scheduled
reduction in tariffs under the AFTA initiative. In view of this, several
non-national manufacturers have begun to position themselves further into the
domestic market. Existing government policies do not permit the establishment
of 100 per cent foreign-owned plants to supply to the local market. Joint-ventures with majority
Malaysian equity are recommended. Foreign investment that brings in new
technology is also highly sought after.
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