The effect of macroeconomic variables on passenger vehicle sales in Malaysia

Transportation is very important to each of people in the modern world. Transportation is needed by people to move from one place to another place. Day to day, demand towards transportation increasing especially on passenger vehicle. To meet this demand, foreign and local automotive companies producing various types and model of vehicles. In Malaysia, there are two national car manufacturers which are Proton and Perodua. Both, car manufacturers continuously produced new cars model in order to compete with foreign car manufacturers which give high competition. However, it seems like foreign cars model tried to dominate local automobile market when many manufacturers and assembler option for CKD (complete knocked-down) to easy access to the Malaysian market. The reduction on taxes for imported cars will increase on consumer purchasing power might give higher threat to national car sales. Moreover, economic condition also will influence the demand on passenger vehicle in Malaysia. These situations giving high threat to national automobiles. Due to that circumstances, this paper aims at finding out the effect of Macroeconomic Variables on the passenger vehicle sales in Malaysia. The variables considered are index of industrial production (IIP), consumer price index (CPI), and oil price (OP). The sample of this study comprises of 60 observations each of the independent and dependent variables on monthly basis over five years period from January 2008 to December 2012. Methodology used for this study is by using Multiple Linear Regression with time series data sourced from Ministry of Commerce and Consumer Affairs, Bank Negara Malaysia and Malaysian Automotive Association (MAA). The result of the study is IIP which is proxy to GDP has significant relationship and simultaneously affect on passenger vehicle sales in Malaysia. The future researcher can depend on IIP as a strong variable that influence passenger vehicle sales.