Boston, MA -- (SBWIRE) -- 07/19/2013 -- New vehicle sales have continued to grow strongly over the first four months of 2013, with the industry seemingly largely unaffected by the run-up to the general elections of May 2013, which were won by the incumbent Barisan Nasional (BN) coalition. According to figures released by the Malaysian Automotive Association in mid-May, a total of 210,153 vehicles were sold in Malaysia over the Jan-Apr period, representing an increase of 12.8% year-on-year (y-o-y). Breaking down the headline figure, there were 185,253 passenger cars (PCs) sold over 4M13, up by 12.8%, and 24,900 commercial vehicles (CVs), up by 12.9%.

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Looking forward, however, BMI would want to inject a note of slight caution into our outlook for new car sales over the balance of 2013. Although we think there will now be a post-election rebound in investment activity, there is growing evidence that the Chinese economy is beginning to cool. This fact, coupled with renewed signs of deteriorating economic conditions in Europe, could weigh on demand for Malaysian exports. As such, our Country Risk team is forecasting a fall in GDP growth to 4.6% in 2013, down from 5.6% in 2012.

However, there are still reasons to be optimistic. We expect private consumption to grow at a relatively robust pace of 5.5% in 2013 before moderating towards 5.3% in 2014, mainly due to the positive effects of cash handouts and increased welfare spending by the government. Moreover, interest rates should remain on hold (at 3%) across the year, given a relatively benign inflationary backdrop. So, against this mixed backdrop, BMI has decided to downgrade its auto forecasts slightly. We now forecast passenger car sales to grow by 4.1% in 2013, from 8.3% previously, to 570,000 units. We are also downgrading our 2013 CV sales growth forecast from 9.0% previously to 6.0%, to 80,000 units. This lowers our total sales growth forecast from 8.4% to 4.3%, to total sales of 650,000 vehicles.

On a long-term basis, BMI remains positive on the outlook for the Malaysian auto industry. Strong consumer sentiment will continue to drive passenger car sales over the forecast period, with the country's ongoing Economic Transformation Program (ETP) - a national policy aimed at developing Malaysia's infrastructure - will ensure a steady demand for CVs.

In 2017, BMI is currently forecasting a total of 910,821 vehicles to be sold in Malaysia, made up of 799,513 PCs and 111,308 CVs.

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