Malaysia vehicle sales up 22.7% in first half

Malaysia vehicle sales up 22.7% in first half

KUALA LUMPUR (Reuter): Malaysia's vehicle sales for the first
six months of 1997 rose 22.7 percent, reflecting the country's
continuing economic strength, the Malaysian Motor Traders
Association (MMTA) said yesterday.

"This strong growth is attributed to the robust economy and
rapid development of the country which resulted in greater
demand, particularly for commercial and four-by-four vehicles,"
said the trade association.

Vehicle sales for the first half of 1997 totaled 192,518
units, compared with 156,862 units in the same period last year.

Passenger car sales grew by 20 percent year-on-year, while
commercial vehicle sales jumped 28 percent, while passenger and
commercial four-wheel-drive vehicle sales rose 42 percent, said
the MMTA.

Analysts said the sales figures were broadly in line with
their expectations, but agreed that strong demand, wrought by an
ebullient economy, was the main factor for the continuing strong
growth.

"The figures were pretty much in line with my estimates, but
still I think they are very, very decent," said Chehan Perera,
automotive analyst at ABN Amro Hoare Govett in Kuala Lumpur.

"As long as the economy grows above six or seven percent,
vehicle sales will continue to be strong," said Perera.

Malaysia's gross domestic product expanded by 8.2 percent in
1996 and is expected to remain stable this year.

Four-wheel-drive vehicles, both passenger and commercial,
showed a stronger growth rate than passenger cars as they
reflected lifestyle changes, said analysts.

The introduction of new four-wheel-drive utility vehicles such
as the Toyota Prado and Nissan Terrano contributed to the growth
of this segment, said Corrinna Cheah automotive analyst at ING
Barings in Kuala Lumpur.

"The four-wheel-drive segment is coming on strongly. There is
an increasing popularity for these vehicles," said Cheah.

The particularly high growth in this segment was also
attributable to a smaller base level, said Cheah.

Currency fluctuations do not affect vehicle prices in
Malaysia, as distributors have to apply to the government before
raising prices.

Under current legislation, distributors can only apply for
price changes if there has been a five percent or greater
fluctuation in the rate of the ringgit against either the
Japanese yen or the U.S. dollar over a specified period.

The growth in commercial vehicle sales was attributed to "on-
going mega projects", said the MMTA.

Sales of locally made cars amounted to 113,405 units in the
first half of 1997, compared to 93,937 units in the same period
in 1996, a growth of 21 percent.

The cars include the Proton, made by Perusahaan Otomobil
Nasional Bhd and Diversified Resources Bhd, and the Perodua made
by MBM Resources Bhd.

A relatively low penetration rate compared to other countries
in the region was also a factor for the rapid growth, he said.

Malaysia has around 7.5 people per car, compared with five
people per car in Taiwan, which is the closest approximation to
Malaysia in Southeast Asia, said Perera.

Singapore has a penetration rate of around eight people per
car, but that figure is skewed because it is a controlled market
for cars, said Perera.

The United States has around 1.5 people per car, he said.