Automobile production iis expected to sink by 12.7 percent this year, driven down by lower consumer confidence and tighter credit, the trade minister warned today.

Muhyiddin Yassin told Bernama that vehicle production is expected to drop to 480,000 units this year from 550,000 in 2008.

muhyiddin yassin interview 100309 03 The current global financial crisis and economic slowdown are impacting the automotive industry worldwide and the car companies globally are experiencing severe difficulties," he said at the opening of the Naza Italia Showroom in Petaling Jaya today.

Muhyiddin's remarks come after the country's vehicle sales fell 4.8 percent year-on-year in February, following a 17.5 percent drop in January as consumer confidence nosedived.

The Malaysian Automotive Association has also made a similar prediction, saying vehicle sales would fall 12.4 percent in 2009 due to a slowing economy and poor consumer sentiment amid the global economic slump.

Muhyiddin said that demand for vehicles has been hurt as banks have adopted tough loan approval standards.

The government has allocated an additional RM200 million to the automotive development fund to spur the industry, he said.

The minister said the fund is part of the RM60 billion economic stimulus package announced on March 10.

The government has said the economy could contract by 1.0 percent in 2009.

Proton to make electric cars

Meanwhile, national automaker Proton has said it will manufacture electric cars for eco-conscious markets in Europe and the United States, in a deal with Netherlands-based Detroit Electric.

The deal is expected to boost Proton revenue by RM2 billion over the next four years, managing director Syed Zainal Abidin Syed Mohamad Tahir told Bernama .

Detroit Electric said that by 2012 it plans to sell more than 270,000 of the zero-emission electric vehicles in the US and Europe as well as China, priced from US$23,000 to US$33,000.

proton cars and money Its chief executive officer Albert Lam said the vehicles, powered by a lithium polymer battery, will have a single-charge range of between 180km and 325km depending on battery size.

He said he was confident in the project despite the global downturn which has seen car sales plummet globally.

"Our target audience are those who purchase practical and affordable vehicles. This makes our products fit the pockets of a very wide audience," he said in a statement late on Monday.

Detroit Electric was an icon of the United States auto industry in the early 1900s, producing the first electric cars. But it went bankrupt in 1939 and was revived by Lam and other shareholders in the Netherlands and the US last year.

Proton also said it was considering sell the vehicles - based on its Persona and Gen.2 models - in Malaysia and elsewhere in Southeast Asia.

Proton was formed 25 years ago as part of an ambitious national industrialisation plan, but its market share has slumped in recent years as it floundered in a newly deregulated market.

- AFP