PETALING JAYA: Shares in foreign car distributors slipped in an immediate reaction to Prime Minister Tun Dr Mahathir Mohamad’s statement that the government is considering limiting the access of foreign cars into the local market.

The Malaysian Automotive Association (MAA), in response to the prime minister’s announcement, said the move would be “regressive” for the industry.

Shares in Mazda dealer Bermaz Auto Bhd fell two sen to RM2.17, while Nissan distributor Tan Chong Motor Holdings Bhd declined one sen to RM1.76.

The local automotive industry is already bracing for the reintroduction of the sales and service tax on Sept 1, 2018, which is expected to impact sales after the three-month tax holiday.

A limit on the import of foreign vehicles will be an additional blow for foreign carmakers operating here.

Dr Mahathir said in Parliament yesterday that the government was reviewing the national automotive policy (NAP), which may include imposing conditions on the import of foreign vehicles.

He said the previous government’s policy, which favoured foreign cars, had made it difficult for Malaysia’s first national car, Proton, to make a profit.

DRB-Hicom Bhd , which is the parent company of Proton Holdings Bhd, was up two sen to RM2.25 following the announcement.

MAA president Datuk Aishah Ahmad said there should be a level-playing field for local and foreign carmakers, as many foreign cars carried local components and provided business and employment opportunities to locals.

For the local automotive industry to move forward, Aishah said the government must create a conducive environment through liberalisation, as done in Thailand and Indonesia.

"Thailand is exporting more than 1.3 million cars a year and Indonesia more than 100,000 vehicles.

“What is Malaysia exporting? Twenty to thirty thousand units a year," she noted in a report by Bernama.

Aishah said the NAP, last updated in 2014, was due for another review to ensure more vehicles are exported from Malaysia.

She also urged the government to review its plan for another national car, saying it would disrupt the local industry which only had a small market with a total industry volume of about 600,000 a year.

"What we don't want is further incentives being provided for the new national car, which will really disrupt the industry. It does not help the industry at all," she explained.