Malaysia's 2018 auto sales rebounded, flat growth seen

A woman walks toward her car in a parking lot in Putrajaya, Malaysia, Wednesday, Jan. 16, 2019. An automotive group says vehicle sales in Malaysia last year has rebounded after two years of consecutive contraction thanks to a three-month tax holiday but growth is likely to remain flat this year amid uncertainties over government policies. (AP Photo/Yam G-Jun)

KUALA LUMPUR, Malaysia — New vehicle sales in Malaysia rebounded last year after two straight years of contraction, thanks to a three-month tax holiday, but growth is likely to remain flat this year amid uncertainties over government policies, an automotive group said Wednesday.

The Malaysian Automotive Association said 598,714 vehicles were sold last year, up 3.8 percent from 2017. It said this was largely due to an upsurge in demand from June to August 2018 after vehicle prices dropped when a new government that took power in May's general election scrapped an unpopular consumption tax.

Prime Minister Mahathir Mohamad's government declared a three-month tax holiday before reintroducing a sales and services tax in September.

Malaysia is the third largest auto market in Southeast Asia after Indonesia and Thailand.

Association president Aishah Ahmad said sales in 2019 are projected to rise by 0.2 percent amid economic uncertainties, a weak ringgit and inflationary pressure. She said car prices have also edged up slightly under the new tax regime.

Changes under the new government have also caused a delay in the approval for pricing of new models. Plans to revise the national auto planning and develop a new "national" model also have raised uncertainties over future policies.

"We foresee 2019 will be another very challenging year," she said.

National carmaker Proton, privatized in 2012 and partly controlled by China's Geely Holding Group Co. Ltd., has only a 10.8 percent market share — a far cry from the two-thirds share it held during its heyday. Proton, founded by Mahathir in 1983, suffered after tariffs that had been protecting from foreign competition were lifted.

Proton has launched a SUV based on Geely's popular Boyue vehicle that it hopes will boost sales and revitalize its stale brand.

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