Malaysia Auto Sales to Keep Rising on Economy, New Models, Consultant Says

Malaysian vehicle sales will probably rise 4.1 percent this year, supported by new models and the country’s “stable” economic outlook, consultants Frost & Sullivan Inc. said.

Total sales may increase to 623,000 units from 598,200 in 2010 Frost & Sullivan said. Small and compact cars, including Perusahaan Otomobil Kedua Sdn.’s new Myvi model, are likely to be the fastest-growing segment, followed by sports utility vehicles, it said.

“Increased interest rates and fuel prices and exchange rate fluctuations will have minimal impact,” Kavan Mukhtyar, a Frost & Sullivan partner told reporters in Kuala Lumpur today.

Malaysia raised benchmark interest rates three times last year to 2.75 percent as its economy rebounded from recession. Gross domestic product may have expanded by between 6 percent and 7 percent last year, central bank governor Zeti Akhtar Aziz said on Nov. 23.

While the benchmark overnight policy rate may increase to around 3.25 percent by mid-2011, this is likely to have “minimal” impact on consumer borrowing and auto loans disbursement, Mukhtar said.

Proton Holdings Bhd. led Malaysian automaker shares higher today following the Frost & Sullivan report. It gained 4.2 percent to 4.69 ringgit in Kuala Lumpur at 12:30 p.m. break, set for its steepest gain since May 27. UMW Holdings Bhd., which part owns Perusahaan Otomobil, advanced 2.1 percent to 7.66 ringgit and Tan Chong Motor Holdings Bhd. added 1 percent to 5.24 ringgit, outperforming a 0.8 percent gain in the country’s benchmark FTSE Bursa Malaysia KLCI Index.

To contact the reporter on this story: Manirajan Ramasamy in Kuala Lumpur at rmanirajan@bloomberg.net

To contact the editors responsible for this story: Barry Porter at bporter10@bloomberg.net; Kae Inoue in Tokyo at kinoue@bloomberg.net.

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