This is despite the smaller decline registered last month

PETALING JAYA: Motor vehicle sales in Malaysia this year will drop substantially although February figures showed a smaller rate of decline, analysts said.

TA Securities said it expected a 16% decline in the sector’s total industry volume (TIV) this year.

“We have yet to see the full impact of the economic downturn trickling in the industry,” the brokerage said, adding that he expected further downside in TIV in the coming months.

Another analyst concurred that demand for vehicles was likely to fall, forecasting a 23% slump in TIV for 2009.

“(Sales of) passenger vehicles will drop and it already has. So far, the commercial vehicle segment seems to be holding but we expect it to drop in tandem with the slowdown in economic activities,” he said.

Research firm Frost & Sullivan was maintaining its earlier forecast of an 8.1% decline in TIV to 501,000 units for 2009 due to the global recession, said Kavan Mukhtyar, the firm’s partner and head of automotive and transportation practice for Asia-Pacific.

“With the current economic downturn, we expect demand to be slow in the first half of the year,” he told StarBiz, forecasting that the passenger vehicle segment would contract 9% to 10% in the first half of the year.

“But we do believe that things will pick up in the second half,” he said, adding that the commercial vehicle segment was likely to experience a slowdown throughout 2009.

“We expect a 12% decline in TIV this year for the commercial segment because sales would be linked to economic performance,” Mukhtyar said.

“With the current slowdown, there would be a drop in the shipment of goods and usage of trucks. This would lead to a delay in demand for new commercial vehicles.”

The Malaysian Automotive Association (MAA) last week said vehicle sales in February slid 3%, or 1,126 units, to 36,675 from January due to lower consumer confidence as a result of the economic slowdown.

Year-on-year, February sales declined 4.8%.

Sales of passenger vehicles dropped 6% to 33,281 units from a year ago but sales of commercial vehicles registered a 9.8% increase to 3,394 units during the same period.

The higher sales in the commercial segment was due to the deliveries of back orders of light commercial vehicles, the MAA said.

Meanwhile, the Government’s “car-scrapping” scheme, announced during the recent mini budget to help boost vehicle sales, has received mixed reactions.

The Government had announced that it would part-finance a scheme by national carmakers Proton and Perodua to allow a discount of RM5,000 for owners who trade in their cars aged 10 years or older for new Proton or Perodua cars.

MAA president Datuk Aishah Ahmad said the scheme should have been applicable to more, if not all car manufacturers, and that it would only help boost the sales of the national carmakers.

OSK Research said it did not expect the car-scrapping scheme to have a big impact on TIV.

“We feel that RM5,000 for a 10-year-old car seems too low, as a Proton (Saga) and Perodua (Kancil) car registered in 1995 can still fetch a good price of RM7,000 to RM9,000,” the research house said in its latest note.

An analyst noted that “a car owner with a 10-year-old car or older would no longer have any loan obligations.”

“Given the current economic situation, weaker consumer sentiment and employment uncertainty, why commit to a new loan scheme?” the analyst said.