KUALA LUMPUR: Car sales are expected to slow down in the second half of this year because of the petrol and diesel price hike, with non-national models suffering more than their national peers, industry observers said.

Total industry volume (TIV) grew to 181,053 units in the first four months of the year, but should slow down from this month, they said.

Affin Investment Bank, in a research note to investors yesterday, said higher petrol cost would reduce the consumers' purchasing power.

"Consumers may turn to public transport or car pool, hence reducing the need for car ownership."

Affin Investment said the impact on Japanese brands like Toyota, Honda and Nissan will be more negative.
"Even though the majority of their customers have high incomes, fear of further petrol price hikes and other price increases may affect demand."

Affin Investment has revised its TIV forecast this year by 3 per cent to 500,000 units, from 515,000 units earlier.

Proton Edar Dealers Association (Peda) deputy president Armin Baniaz Pahamin, meanwhile, believes the situation works to Proton and Perodua's favour.

"Proton is the people's car. Hence the impact will be negligible," he said, adding that the fuel hike will affect the use and behaviour of Proton car owners only for a short-term.

Armin felt that strong national car sales would offset an expected decline in demand for non-national models.

"Even in Thailand, with higher petrol price and lower household income, car sales kept increasing and growth was not affected," he said.

Another industry executive said sales of small-capacity motorcycles and cars could easily double.

A senior executive of a non-national car dealer, meanwhile, expects bleak prospects for vehicles running on diesel.

"Prior to the RM1 increase on diesel to RM2.58 now, the road tax for these vehicles was already double that of petrol-powered vehicles," he said.